1e1864December 11,2019

WHEREAS, on May 9,2018, City Council adopted the Comprehensive Housing Policy(CHP) and created the Dallas Housing Policy Task Force to (1) create and maintainavailable and affordable housing throughout Dallas; (2) promote greater fair housingchoices; and (3) overcome patterns of segregation and concentrations of poverty throughincentives and requirements by Resolution No. 18- 0704; and

WHEREAS, on June 28,2018, City Council authorized ordinances amending Chapter51 and Chapter 51A of the Dallas Development Code (1) to allow the Board of Adjustmentto grant a special exception to authorize an accessory dwelling unit to be rented; and (2)to create regulations for an accessory dwelling unit overlay by Ordinances Nos. 30930and 30931; and

WHEREAS, on November 28,2018, City Council authorized amendments to the City ofDallas CHP to make technical changes to the Home lmprovement and PreservationProgram (HIPP), the Dallas Homebuyer Assistance Program (DHAP), and the NewConstruction and Substantial Rehabilitation Program by Resolution No. 18-1680; and

WHEREAS, on March 27, 2019, City Council authorized an ordinance amendingChapter 51 and Chapter 51A of the Dallas Development Code to create regulations formixed income housing development bonuses and an ordinance granting the amendmentsby Ordinance No. 31152; and

WHEREAS, on March 27, 2019, City Council authorized an ordinance amendingChapter 20A - Fair Housing of the Dallas City Code by adding Article ll, Mixed IncomeHousing by Ordinance No. 31142; and

WHEREAS, on May 22,2019, City Council authorized a resolution in furtherance of theCity of Dallas' efforts to support diverse racial, ethnic, cultural, and socio-economicbackgrounds and to promote equity in the Dallas community, and Section 5 of thatresolution declared the City's intent to promote equity in budgeting by Resolution No. 19-0804; and

WHEREAS, on May 22, 2019, City Council authorized an amendment to the City ofDallas CHP to add a Land Transfer Program to incentivize the development of quality,sustainable housing that is affordable to the residents of the City and the development ofother uses that complement the City's CHP, economic development policy, orredevelopment policy by Resolution No. 19-0824; and

WHEREAS, on June 12,2019, City Councilauthorized amendments to the City of DallasCHP to amend and restate the low-income Housing Tax Credit policy by Resolution No.19-0884; and

WHEREAS, on June 26,2019, City Council authorized amendments to the City of DallasCHP to amend the DHAP, the HIPP Homeowner Program, and the HIPP LandlordProgram by Resolution No. 19-1041; and

191864December 11. 2019

WHEREAS, on September 25,2019, City Council authorized amendments to the City ofDallas CHP to create the Title Clearing and Clouded Title Prevention Pilot Program byResolution No. 19-1498; and

WHEREAS, City Council must approve any addition to, alteration of, or deletion of astrategy, tool, or program in the CHP; and

WHEREAS, the City desires to maintain affordable housing, to provide greater fairhousing choices, and to overcome patterns of segregation and concentrations of poverty;and therefore, it is in the best interest of the City to adopt certain amendments to the CHP;and

WHEREAS, it is in the best interest of the City of Dallas to adopt an amendment to theCHP in order to (1) delete Section 8 of Resolution No. 18-0704 relating to the housingpolicy task force, add new provisions for a housing policy task force to the CHP, anddelegate authority to the city manager to amend the composition and structure of thehousing policy task force outlined in Appendix 1; (21update the language to comply withthe mixed income housing development bonus previously approved by City Council onMarch 27, 2019; (3) update the language related to accessory dwelling units to complywith provisions approved by city council on June 27 ,2018; (a) remove Exhibit A - the CityCHDO Application from the Community Housing Development Organization (CHDO)Policy, Procedure, and Standards appendix; and (5) remove the Owner-OccupiedHousing Rehabilitation/Reconstruction Program General Contractor/ HomebuilderApplication appendix.

Now, Therefore,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DALLAS:

SECTION 1. That the City Council hereby authorizes the amendments to the CHP, asreflected in the attached Exhibit A, to (1) delete Section 8 of Resolution No. 18-0704relating to the housing policy task force, add new provisions for a housing policy taskforce to the CHP, and delegate authority to the city manager to amend the compositionand structure of the housing policy task force outlined in Appendix 1; (21 update thelanguage to comply with the mixed income housing development bonus previouslyapproved by city council on March 27,2019; (3) update the language related to accessorydwelling units to comply with provisions approved by city council on June 27, 2018; (a)remove Exhibit A - the City CHDO Application from the Community Housing DevelopmentOrganization (CHDO) Policy, Procedure, and Standards appendix; and (5) remove theOwner-Occupied Housing Rehabilitation/Reconstruction Program GeneralContractor/Homebuilder Application appendix.

1g1g6, 4December 11.2019

SECTION 2. That this resolution shall take effect immediately from and after its passagein accordance with the provisions of the Charter of the City of Dallas, and it is accordinglyso resolved.

APPROVED ts''/CITY COUNCIL

DEC .l I 2019

'l 91864

EXHIBIT A

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Comprehensive Housing Policy

City of DallasDepartment of Housing and Neighborhood Revitalization

Adopted by the Dallas City CouncilMay 9,2018

Amended December LI, 20L9

191864

Table of Contents

BACKGROUND ON DEVELOPMENT OF THE POLICY................

Policy Goals

Market Value Ana|ysis ..............

CITY OF DALLAS PIANS.........

forwardDallas ! Comprehensive Plan ............

Neighborhood Plus Plan ...................

Consolidated Plan Strategies

REI NVESTM ENT STRATEGY AREAS...

Redevelopment Areas:

Stabilization Areas:

Emerging Market Areas:

PRODUCTION GOALS AND INCOME BANDS TO BE SERVED

HOUSING POLICY TASK FORCE

HOMEOWNER PROGRAMS ..............

Rehabilitation, Repair & Reconstruction of Owner-Occupied Homes ..

Dallas Homebuyer Assistance Program

Accessory Dwelling Units...........

Homebuyer lncentive Program......

LANDLORD PROGRAMS

Rental Rehabilitation .................

TENANT PROGRAMS

Tenant Based Rental Assistance

DEVELOPER PROGRAMS

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IL

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2

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3

4

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4

4

6

8

9

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...23

...23

20

24

24

30

30

....32

....32New Construction and Substantial Rehabilitation Program.

Mixed lncome Housing Development Bonus

Land Transfer Program

PRESERVI NG AFFORDABILITY...,.........

Title Clearing and Clouded Title Prevention Program

Community Land Trust Program......

FUNDING AND SUPPORTING ACTIONS

Federal Funding Sources......

State and Local Funding Sources

City of Dallas Policy for Supporting Housing Developments Seeking Housing Tax Credits

Community Housing Development Organizations (CHDOs) ..................

Strategies, Tools, and Programs that Will Require Additional Action

Housing Trust Fund

Tax lncrement Financing

Neighborhood Empowerment Zones ..

Sublease Program

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48

48

50

54

54

55

56

63

65

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55

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66APPENDICES...

Housing Policy Task Force Structure and Leadership

APPENDIX 2...

Single Family Development Underwriting...

APPENDIX 3.................

Rental Development Underwriting..............

UNIVERSAL DESIGN GUIDELINES

APPENDIX 5......

City of Dallas lncome Limits and Part 5 Requirements...

APPENDIX 6.....

Community Housing Development Organization Policy, Procedure, and Standards...

Recapture/Resale Requirements for Homebuyer Activities.........................

APPENDTX 8................

Cityof DallasAffirmative Fair Housing Marketing Policy ...............

APPENDIX 9

Residential Anti-Displacement and Relocation Assistance Plan (RARAP) ...

APPENDTX 10............

Other Federal Requirements ................

APPENDTX 11...............

Lead-Based Paint Requirements.......

APPENDIX 12..

Environmental Review Policy, Procedures, and Standards ....

APPENDIX 13.......

sEcTtoN 3....

APPENDIX L4.......

M inority/Women Business Enterprise .......................

APPENDTX 15.....................

Regulatory References.

APPENDIX 16....

Community Land Trust Designation lmplementation Guidelines ........

lnterventions by Strategy Area

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702

102

105

105

L07

707

109

109

113

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67

67

69

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89

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99

99

...115

...115

...116

776

120

L20

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191864

BACKGROUND ON DEVELOPMENT OF THE POLICY

Policy GoalsOn March 12,2017, the Dallas City Council Housing Committee established three goals for thedevelopment of a comprehensive strategy for housing: 1) Create and maintain available andaffordable housing throughout Dallas, 2) Promote greater fair housing choices, and 3) Overcomepatterns of segregation and concentrations of poverty through incentives and requirements.

Market Value Analysisln August 2017, the City of Dallas engaged The Reinvestment Fund to conduct a Market ValueAnalysis (MVA), which is an analytical tool used to assess the residential real estate marketthroughout the entire city to determine with granular detail where market strength, transition andstress exists. After briefing the City Council on the results of the MVA on January 17,2018, eightpublic town hall meetings were held to develop the recommendations presented here. The townhall topics were:

. How Residential Development Gets Financed,

. How to Reduce Development and Rehabilitation Costs,o How to lncrease Access to Capital and Reduce Cost of Capital, and. Programs, Tools and Strategies for lncreasing Housing Production.

Each town hall provided stakeholders an opportunity to understand the housing challenges fromthe perspective of the major stakeholders, including lenders, foundations and governmentsources of finance; consumers and neighbors; developers, builders, and contractors; andregulatory officials, such as zoning, building inspections, and code enforcement. The town hallswere held both in person and through virtual telephone communications that aired on SpectrumChannel 95 and streamed online. The in-person town halls had a combined participation of 94individuals, many of whom also participated in the virtual town hall meetings. The virtual telephonetown halls had a total of 38,690 participants for all four meetings, of which 10,000 participated inmore than one town hall.

The outcome of public input helped shape the ten policy recommendations presented to theEconomic Development and Housing Committee (Committee) on March 19, 2018 and thestrategies, tools and programs included in the Comprehensive Housing Policy.

1

191854CITY OF DALLAS PLANS

forwardDallas! Comprehensive PlanThe fonruardDallas! Plan is Dallas'first citywide comprehensive plan to serve as the policy basisfor land development decisions in the City, through reference in the Dallas Development Code.The plan contains eight policy elements: Land Use, Economics, Housing, Transportation, UrbanDesign, Environment, and Neighborhoods. lt provides guidance on important land developmentconsiderations related to land use, transportation and economic development. Shaped byextensive community engagement and adopted by City Council in 2006, it envisions a futureDallas built around the core values of:

o Access to good education. A safe cityo A healthy environmentr Job growth through investment in Southern Dallas. Convenient transportation through choices in how to get around. Quality of life through diverse housing, recreational, cultural and educational opportunities

A key initiative of the foruvardDallas! Plan was a focus on making high quality housing moreaccessible. The plan acknowledged that, within the regional context, Dallas has the greatestrange of housing needs and problems. lt recommended development of a housing strategy aimedat increasing home ownership, diversifying housing stock and providing more opportunities foraffordable housing, while sustaining existing neighborhoods.

The forwardDallas! Comprehensive Plan can be found athttp://dallascitvhall.com/departments/pnv/strateqic-plannino/Paqes/comprehensive-plan.aspx.

Neighborhood Plus PlanAdopted in 2015, the Neighborhood Plus Plan is a citywide neighborhood revitalization planintended to update the forwardDallas Housing and Neighborhood elements. The NeighborhoodPlus plan focused on the six strategic goals of:

. Creating a Collective lmpact Frameworko Alleviating Poverty. Fighting Blighto Attracting and Retaining the Middle Classo lncreasing Home Ownershipo Enhancing Rental Options.

The Neighborhood Plus recommended a holistic approach to neighborhood revitalization andcommunity building that goes beyond production of a limited number of publicly subsidizedhousing units, to encompass neighborhood quality, safety, mobility and access to education, jobsand health care. The Neighborhood Plus Plan also called for a neighborhood by neighborhoodapproach to improving quality of life and established the basis for identifying target areas to focusneighborhood revitalization efforts.

The Neighborhood Plus Plan can be found at http:i/dallascitvhall.com/departments/pnv/strateqic-planninq/DCH%20Documents/Web%20-%20Neighborhood%20Plus%20Plan%20-

"h20 Adopled/o2} 1 0 - 07 -20 1 5 .p dt .

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191864

Consolidated Plan StrategiesThe Consolidated Plan is a five-year planning document required by HUD to carry out affordablehousing and community development activities. The City identified its priorities as follows:

Citizen Priority Ranking Survey

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r Homeownership r Home Repair r Other

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19186, 4

REINVESTMENT STRATEGY AREAS

The Housing Policy provides for tiered Reinvestment Strategy Areas to address three markettypes in need of City investment:

Redevelopment Areas:A redevelopment area is characterized by a known catalytic project that has submitted a requestfor funding that shows preliminary viability and will begin within the next 12 months. The projectas proposed must contain a housing component and must address the existing market conditionsas identified in the MVA and must demonstrate a level of housing production supported througha third-party independent market analysis and show affordability to a mix of income bands.

Redevelopment Areas: Midtown, High Speed Rail, Wynnewood, and Red Bird.

Stabilization Areas:Stabilization areas are characterized as G, H, and I markets that are surrounded by A-E marketsand as such are at risk of displacement based on known market conditions including upcomingredevelopment projects. These areas are also where accessory dwelling units should be focusedto allow for increased density.

Stabilization Areas: LBJ Skillman, Vickery Midtown, Casa View, Forest District, EastDowntown, The BottomlTenth Street, West Dallas, and Red Bird North.

Emerging Market Areas:These markets are characterized as areas in need of intensive environmental enhancements,master planning, and formalized neighborhood organization. ln order to facilitate the creation ofmixed income developments, the City recommends seeking designation as NeighborhoodRevitalization Strategy Areas (NRSA's) through HUD in order to prepare the area for real estateinvestments in a 3 to S-year time frame and provide flexibility of use of funds without incomequalifications.

Emerging Market Areas:'Southern Gateway, Pleasant Grove, and University Hills.

4

191864

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Rcdcvelopmcnl Areas

Stabilization Areas

Emerging $arhetAreas

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191864

PRODUCTION GOALS AND INCOME BANDS TO BE SERVED

Dallas has a housing shortage of approximately 20,000 units. This shortage is driven by the costof land and land development, labor and materials shortages, federal, state and local constraints,as well as the single-family rental market which prevents equilibrium in the homeownershipmarket. lt is difficult to convert rental homes to homeownership because of the perception of theneighborhood, the condition of the housing stock once it's been in the rental market for a periodof time and because income-producing property in a tight market will not be released by landlordsuntil returns are diminished. This shortage is consistent with the overall national trend followingthe 2009 housing bust. While the housing market has seen a steady but slow recovery, job growthin the Dallas metro area attracted a population growth of about 2.9o/o lhal outpaced the growth inthe supply of housing. Much of the single-family housing inventory converted to rental followingthe 2009 bust while 60% or more of the home sales in the three years following were in the pricerange below $249,999. ln 2014 the housing market was in transition - the number of home salespriced under $249,999 decreased to less lhan 4Q"/" of the market and by 2017 nearly 58% ofhome sales were priced between $300,000 and $1 million. According to the Real Estate Centerat Texas A&M University, while the volume of homes in Dallas only grew by 3.6%, the mediansales price in Dallas grew by 9.1% in 2017.

These market conditions have led to an increase in both rental rates and sales prices in the overallmarket, and 6 out of 10 families in Dallas are housing cost burdened, meaning they spend morethan 30% of their income on housing due in part to wages not keeping pace with housing costs.Undoubtedly, families at lower income bands are more financially strained by these marketconditions. Therefore, increasing production over a 3-year period and minimizing the regulatorybarriers to overall market production is equally important. Furthermore, because this has madeeven deteriorated housing stock unaffordable, it makes the need for home repair programs moreimportant than ever. Table 1 below shows annual production goals of 3,733 for homeownershipunits and 2,933 for rental units while still maintaining the 3-year historic average ratio ofhomeownership and rental percentages.

Beyond unit production, the City supports creating increased availability of housing for people atincomes ranging from 30% to 120o/o of the HUD Area Median lncome by incentivizinghomeownership developments for families at 60% or higher AMI and rental developments thatinclude rent restricted units for families at the full range ol30o/"lo 120Y" of AMl. These targets arealso outlined in Table 1 below.

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19'l 864

Table 1

Production Goals

Percentage of HUD

Area Median lncomeDallas Metro

Homeownership Rental

ProductionGoals

%Production

Goalso/to

Market Raterot-L20% 933

55o/os87

40%8t-LO0% L,12O 587

Extremely [ow, VeryLow, and Low

lncome

6t-80% L,307

45o/o

733

60%st-60% 373 440

3L-5Oo/o n/a 293

30% n/a 293

Total 3,733 2,933

7

191864

HOUSING POLICY TASK FORCEAdded December 11,2019

SummaryThe Housing Policy Taskforce (taskforce) was established with the adoption of the comprehensivehousing policy to solicit input from the general public and industry experts on the city's housingpriorities and goals. lt creates a forum for open dialogue and education on housing issues andprogress updates on how the city is addressing the issues. Through Taskforce activities, thecomprehensive housing policy will be tested, implemented and changed all in the interest ofserving the residents of Dallas.

StructureThe housing policy task force is led by a steering committee with a chairperson, five focus areafacilitators with industry expertise, and five focus area City staff representatives.

The task force itself is open to any member of the public who chooses to attend the meetingsand/or submit feedback electronically. This open form of membership is a deliberate designcomponent of the task force so that the City continues to build upon the significant publicparticipation that occurred during the initial development of the comprehensive housing policy

Within the direction provided by City Council, the task force and its steering committee contributestakeholder input and subject-matter expertise in the following focus areas and to further thefollowing purposes:

Multifamily development: Develop and refine policy, programs, strategies, and tools,and recommend amendments to the development code that maximize the production ofnew mixed-income multifamily and rental units by providing incentives for mixed incomedevelopment.Single family and ownership development: Develop and refine policy, programs,strategies, and tools, and recommend amendments to the development code that maximizeproduction of new mixed-income single family and ownership units from 60% to 120% AMIby providing incentives for mixed income development.Affordability preservation: Develop and refine policy, programs, strategies, and tools,that encourage rehabilitation and preservation of, and improve access to, existingaffordable rental and homeownership housing unitsNeighborhood investment: Develop programs, strategies, and tools to invest funds andcity support in neighborhoods in need of investment in preparation for future market-basedinvestment in Reinvestment Strategy Areas while ensuring sustainable, equitable growthand promoting greater fair housing choices.Support and funding: ldentify and secure new funding sources, maintain and supportexisting funding sources, minimize regulatory barriers, and review all state and federalpolicy recommendations related to housing while ensuring transparency and affirmativelyfurthering fair housing

The steering committee members will regularly communicate with each other, and the task forcewill engage a broad segment of the public in guiding the implementation of the CHP.See Appendix 1 for the housing policy task force structure and leadership.

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1918 54

HOMEOWNER PROGRAMS

Rehabilitation, Repair & Reconstruction of Owner-Occupied Homes(added/amended June 26,2019 by Resolution No. 19-1041)

The Home lmprovement and Preservation Program (HIPP) provides an all-inclusive repair andrehabilitation program for single-family owner-occupied housing units. HIPP is a comprehensiveprogram with three components for the purpose of making needed improvements and preservingaffordable housing: a Minor Home Repair grant program for low and moderate-incomehomeowners needing minor repairs not exceeding $t 0,000 ($S,OOO from the City and $5,000 fromthe participating nonprofit); a Rehabilitation Loan program for low- and moderate-incomehomeowners needing up to $40,000 in rehabilitation; and a reconstruction loan program for low-and moderate-income homeowners needing up to $160,000 to reconstruct their homes. Theterms of assistance for the loans vary based on the borrower's income, need, and debt capacity.

1. MINOR HOME REPAIR GRANT PROGRAM

The Minor Home Repair Grant Program provides grant assistance to non-profit organizations forthe preservation of decent safe and sanitary housing, to eligible homeowners, for minor homerepairs as described below. Funding for this program is provided by the United States Housingand Urban Development (HUD) Community Development Block Grant (CDBG) funds and/or non-federal funding; and funds from partnering non-profits, provided on a minimum 1:1 match basis.Not to exceed $10,000 per household.

Applicant EligibilityApplicants for the Minor Home Repair Grant Program ("MHRGP") must meet all of the followingrequirements to be eligible to participate.

Applicants must be the owner of the dwelling to be repaired and must submit a deedshowing the conveyance, or similar documentation acceptable to the City in its solediscretion, that proves ownership in fee simple.Applicants must be a U.S. Citizen or lawful Permanent Resident, and they must hold acurrent Texas State issued identification card or Driver License.Applicants must be current on mortgage payments and shall not be in default under themortgage documents associated with the property or in default under any lien on theproperty.Applicants must have a gross annual household income at or below the applicable low-and moderate-income limits. Applicants must be at or below 80% AMI when CDBG fundsare used or at or below 120o/o of AMI when non-federal funds are used. as established byHUD for the jurisdiction of Dallas, Texas. lncome shall be calculated using the Part 5method as outlined in 24 CFR 5.609. lncome eligibility shall be determined at the time ofthe application. Applicant household income eligibility is only valid for six months from thedate of the last application.City Council members, Department of Housing and Neighborhood Revitalizationemployees and any employee, official or agent of the City who exercises any policy orprogram decision-making function in connection with the Program are ineligible forassistance under the Program.Priority shall be given to applicants who have not participated in any City repair,rehabilitation, or reconstruction program previously.

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Property Eligibility Requirements. The property must be a single-family home.. The property must be located within the Dallas, Texas city limits and applicant must have

occupied the dwelling for at least six months from date of application.o The property must obtain environmental clearance under 24 CFR Part 58.5 prior to

committing repair funds.. The property must be in need of repairs designated as eligible improvements under

MHRGP.. The home must not have been reconstructed under any City program.

Eligible Repair lmprovementsEligible improvements under MHRGP include the following:

Roofing repair (for leaking roofs) (patching only on houses)Exterior entry doors (repair only)Exterior windows (for broken windows) (replacement or repair)Accessibility repairs and installation such as ramps, handrails or repairing walkwaysWater heaters (replacement or repair)Heating systems/cooling systems (repair, replacement (small units only, i.e. window units),or purchase of wall heaters or wall air conditioning units)Plumbing interior (water lines, sewer lines, toilet repairs, etc.)Electrical (repair of breakers, panels or wiring)Gas linesFloors (repair only)lnterior and exterior repairs (as needed)Any item determined eligible by the Director

Terms of AssistanceAssistance under MHRGP is provided in the form of a grant to the non-profit partner, who willprovide a 1:1 match and contract with the applicant for repairs directly.

Assistance LimitsThe maximum assistance amount provided under MHRGP is $10,000, which includes up to$5,000 provided by the City, and up to $5,000 in matching grant funding provided by the non-profit partner. .City will match 1:1; the non-profit organization will be responsible for any repairsthat exceed $10,000 per home.

AdministrationActivities under the MHRGP will be outsourced to a non-profit partner(s) that has experienceproviding rehabilitation services and has committed to providing a 1:1 match to City programfunds. The non-profit partner(s) shall be procured by the City. The City will refer approvedapplicants to the subrecipient non-profit partner.

The administration of MHRGP shall be performed by the non-profit partner(s). To ensure that thecorrect program has been selected for the applicant, referrals shall be provided by the City. Cityadministration of the program includes income eligibility referrals, application evaluationprocedures, repair assessments, ongoing compliance and other duties as established in thecontract, the program guidelines, and the policies and procedures.

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2. REHABILITATION PROGRAM

The Rehabilitation Program (Rehab) is a repayment loan program to low- and moderate-incomehomeowners for the purpose of making needed improvements and preserving affordable housing.Rehab is designed to finance home improvements and to address health, safety, accessibilitymodification, reconstruction and structural/deferred maintenance deficiencies. Rehab will enablehomeowners to improve their housing while creating a positive effect in the community. Fundingfor this program is provided by HUD CDBG funds (limited to assistance provided to 80% areamedian family income (AMFI) households or below); and potentially non-federal funds at 12Oo/o

AMI households or below. Not to exceed $40,000.

Applicant Eligibility. Applicants must be the owner of the property (herein referred to as "Applicants", this

definition applies to the HIPP programs and the HIPP rental program) to be repaired andmust submit a deed showing the conveyance, or similar documentation acceptable to theCity in its sole discretion, that proves ownership in fee simple.

. Applicants must be a U.S. Citizen or laMul Permanent Resident, and they must hold acurrent Texas state-issued identification card or driver license.

. Applicants must have a gross annual household income at or below the applicable low-and moderate-income limits. Applicants must be at or below 80% AMI when CDBG fundsare used or at or below 1200/" of AMI when non-federal funds are used as established byHUD for the jurisdiction of Dallas, Texas. lncome shall be calculated using the Part 5method as outlined in 24 CFR 5.609. lncome eligibility shall be determined at the time ofthe application. Applicant household income eligibility is only valid for six months from thedate of the last application.

. Applicants must be willing to correct all code violations that currently exist on the property.

. City Council members, Department of Housing and Neighborhood Revitalizationemployees and any employee, official or agent of the City who exercises any policy orprogram decision-making function in connection with the program are ineligible forassistance under the program.

. Applicants must be current on mortgage payments and shall not be in default under themortgage documents associated with the property.

r Priority shall be given to Applicants who have not participated in any City repair,rehabilitation, or reconstruction program previously.

. Applicants must be willing to voluntarily relocate at the homeowner's expense, ifnecessary.

Property Eligibility Requirements

o Must be a single-family dwelling, owner-occupied, and must be located within the City ofDallas, Texas city limits.

e Must obtain environmental clearance under 24 CFR Part 58.5, as amended, prior tocommitting rehabilitation funds.

. Property taxes must be current. Property taxes must not be delinquent for any tax yearunless the Applicant has entered into a written agreement with the taxing authorityoutlining a payment plan for delinquent taxes and is abiding to the written agreement.

o Standard property insurance, satisfactory to the City, must be maintained on the property(with coverage adequate to insure the City's lien position). lf a property is located in afloodplain, as determined by the City of Dallas, in its sole discretion, flood insurance must

11

191854

also be maintained with coverage adequate to insure the City's lien position. lnsurancewill be monitored during the length of the compliance period, which will be until the loan isrepaid in full.

. Applicant must certify that the home is not for sale and is the primary residence ofApplicant.

o lf the property was previously assisted with City funds and the property is still within theperiod of affordability, per the written agreement with the Applicant or the previous owner,Applicant will not be eligible to receive funding for the same property.

o Must not have more than one outstanding loan on the property. City will only accept a firstor second lien position. Applicants having a reverse mortgage on the property shall not beeligible for this program.

o No liens, except those associated with the first mortgage, shall exist on the property.. Requested repairs must conform with the designated eligible improvements under this

program. The City has the authority to determine what the necessary repairs will be andwhen the amount exceeds the limits.

Eligible Repair lmprovementsEligible rehabilitation activities will include only items necessary to bring the structure intocompliance with the City's written rehabilitation standards and applicable local residential codes;but will also include items recommended as necessary to preserve the property's structuralintegrity, historic integrity, weatherization, and quality of living conditions. The scope of work mustaddress all major systems to ensure that they have a remaining useful life of a minimum of 5years at project completion. Major systems are identified as structural support (foundations);roofing; cladding and weatherproofing (e.9., windows, doors, siding, gutters); plumbing; electrical;and heating, ventilation, and air conditioning.

lmprovements to, or demolition of an accessory structure such as detached garage, work shed,or small residential structure will be made on a case by case basis depending on the availablebudget, grant requirements, planning requirements, current building codes, health and safetyconcerns, and minimum occupancy requirements of residents of the property.

Assistance in removing any items from the property that are considered to be dangerous,hazardous, or a violation of local code is an eligible repair when performed in conjunction with therehabilitation of eligible improvements on the property.

Assistance may not be used for the purchase or repairs of appliances (except for energy efficientwindow units) or renovations not necessary to bring the home up to local code or propertystandards. lneligible repairs include but are not limited to luxury and recreational items (granitecounter tops, swimming pools, spas, high end fixtures); tree trimming; fences; and landscaping.

Eligible improvements under the Rehabilitation Program include the following:o Correction of code violations and elimination of specific conditions detrimental to public

health & safety identified by the City.o Correction of incipient violations of the City of Dallas Building Code. Cost effective energy conservation measures, including solar heating, cooling & water

systems permanently affixed to dwellingo Testing & treatment/removal of lead-based painVasbestos hazards. Handicapped improvements & removal of barriers to the handicappedo Removal of termites; removal of rodents and roaches (pest control), but may not be a

stand-alone cost

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o Replace/repairroofing. Replace/repair HVAC systems. Replace/repair plumbing/sewer pipes/kitchen and bath fixtures. Replace/repair window and/or door screenso lnstall new smoke alarmso lnstall new insulation. Replace/repair flooring and carpeting. Replace/repair water heaters. Replace/repair electrical system and installation of ground fault circuit interrupterso Replace/repairwindows. Replace/repair plaster, siding and stuccor Painting (inside and outside)o Install new deadbolt locks. Replace/repair kitchen or bath cabinets and countertops. Replace/repair garage doorso Structural repairs/modifications (only to correct existing structural code deficiencies or to

provide accessibility to disabled persons)o Foundation repairso Any items determined eligible by the Director

Terms of AssistanceThe terms of assistance for Rehab will be in the form of a loan. The loan amount shall be subjectto the City's established underwriting criteria/requirements and shall equal the lower of either aloan to value ratio not exceeding 85% ol the applicable county's appraisal district market valueand all outstanding loan obligations secured by the property, or 80% of the assessed improvementvalue as determined by the appraisal district. The City loan is secured by a first or second lien onthe property, signed by Applicant as the owner of the property. Monthly loan repayments arebased on the following loan schedule:

. Applicants with incomes at or below sixty percent (60%) AMI will receive a deferred, zeropercent interest (0%) loan.

. Applicants with sixty-one to eighty percent (61% - 80%) AMI will have a combination ofdeferred, zero percent interest (0%) loan and monthly installment payment plan asdetermined through the City's underwriting.

. Applicants with (81%-120%) AMl, will have a monthly installment payment with threepercent interest (3%) on the loan.

The affordability period for the Rehabilitation Program shall be 5 years.

During the period of affordability, monitoring shall be performed on an annual basis. Applicantshallalso be required to provide on-going proof of insurance to the City, with the City as an addedinsured. Applicant must certify annually that the home is not for sale and is the primary residenceof the Applicant until the loan is repaid to the City in full.

ln addition to execution of a loan agreement, execution and recordation of a deed of trust, deedrestriction, and a note will be required.

Applicant may repay Rehab loans at any time without penalty. Loans are immediately payableupon the earlier of:

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. The sale, conveyance, transfer, rental, hypothecation of the security; oro lf the home is vacated during the term of the loan; or. Failure to adhere to the provisions of the loan agreement; oro Failure to adhere to the provisions under the City's deed restrictions, deed of trust and/or

the note.

Rehab loans are not assumable except under the following limited circumstances:

o Transfer of property to a surviving spouse;. Transfer of property to an heir(s);o Transfer of property where spouse becomes the sole owner of the property;. Transfer of property resulting from a decree of dissolution of marriage, legal separation or

from incidental property settlement agreement; or. Transfer to a Family Trust in which the borrower remains the beneficiary and occupant of

property.

All transfers must be approved by the City. Any person that would like to assume the loan mustincome qualify and utilize the assisted property as their primary residence. lf such person doesnot meet the income requirements of the program or does not utilize the property as their primaryresidence, then the full loan amount is due immediately and payable, in full, to the City.

Assistance LimitsUnder Rehab, the maximum loan assistance amount is 940,000.00. Rehab funds may only beused to complete the project-related hard costs such as construction costs. Project-related softcosts such as hazardous materials testing fees, document recordation fees,inspection/construction management fees, escrow fees shall not be included as part of the loanprovided to the Applicant. These costs shall be provided by the City as part of its delivery costs.These costs are program delivery cost of the City, such cost will not be included in the loanamount.

The level of assistance shall be limited to the amount required to address the rehabilitation workscope as defined by the City and shall not exceed the maximum allowable funding level of$40,000.00 (except as provided below). The City Manager or designee may on a case by casebasis administratively approve (without City Council approval or Council Committee approval)additionalassistance not to exceed ten percent (10%) above the maximum limit of $40,000.00 forany owner-occupied rehabilitation project under the following circumstances:

o To address outstanding repairs or necessary work to close out an existing project;. The need to provide reasonable accommodations in accordance with the Americans with

Disabilities Act or other local, state or federal law;. Unanticipated costs deemed necessary to meet applicable Dallas City Code requirements;o Unforeseen environmental issues; and. Addressing issues that threaten life, health, safety and welfare of the public.

Credit and Underwriting StandardsThe following are the credit and undenruriting standards for HIPP loans

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. Chapter 7 or Chapter 13 bankruptcy is not allowed if the primary or any mortgage isincluded as a secured creditor on the subject property for which the City will place a liensecuring the loan.

. Qualifying debt to income ratios are 26-320/o on the front end and 43o/" on the back end.

. Properties may not have more than one outstanding loan on the property. The City will notaccept a lien position lower than a second lien.

. Properties with a reverse mortgage are not eligible for this program

Mortgage and RefinancingAssistance may be provided to an Applicant who has an existing mortgage or equity loan if thetotal debt, including mortgage/equity loan balance and all rehabilitation costs do not exceed 85%of the after-rehabilitation value of the property for Rehab. The City's deferred loan may besubordinate to the existing mortgage or equity loan only if these loan-to-value requirements aremet. The City loan will be in no lower than a second lien position. Refinancing will only be allowedupon prior approval of the City and for favorable rates and terms; no cash out financing will beallowed.

Administration

The City of Dallas Department of Housing and Neighborhood Revitalization Staff or theirdesignees ("Staff') shall administer the Rehabilitation Program. As used herein, the term "Staff"may include either employees or consultants of the department under the direction of the Director(defined below) or his/her designee. The administration of Rehab includes application evaluationprocedures, rehabilitation assessments, cost estimation, bid solicitation, contractor selection,construction management, inspection, disbursement of program funds and processing of noticesof completion, and other duties as established in the program guidelines as well as the policiesand procedures.

The Director of Housing and Neighborhood Revitalization (the "Directoi') shall be responsiblefor ensuring that all programs are implemented in accordance with all applicable policies andregulations.

3. HOUSING RECONSTRUCTION PROGRAM

The Housing Reconstruction Program ("HRP") provides loan assistance to eligible homeownersof single-family, detached dwellings for the reconstruction of existing housing. Subject to therequirements stated below, dwellings requiring repairs that exceed 80% of the-Assessed BuildingValue as determined by the County Tax Office qualify for this program assistance. Assistance forthis program is provided by HUD through the Home lnvestment Partnerships Program (HOME),CDBG, and/or non-federal funds.

Applicant Eligibility. Applicants must be the owner of the dwelling to be reconstructed and must submit a deed

showing the conveyance, or similar documentation acceptable to the City in its solediscretion, that proves ownership in fee simple.

. Applicants must be a U.S. Citizen or lawful Permanent Resident, and they must hold acurrent Texas State issued identification card or Driver License.

. Applicants must reside in the dwelling to be reconstructed and it must be the Applicant'sprimary residence.

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191864. Where federalfunds are provided, Applicant must have a gross annual household income

at or below the applicable low- and moderate-income limits (<80% AMI) as established byHUD for the jurisdiction of Dallas, Texas. lncome shall be calculated using the Part 5method as outlined in 24 CFR 5.609. Non-federally funded activities allow applicants tohave a gross annual household income at or below 1200/" of AMl. lncome eligibility shallbe determined at the time of the application. Applicant household's income eligibility isonly valid for six months from the date of the last application.

o City Council members, Department of Housing and Neighborhood Revitalizationemployees and any employee, official or agent of the City who exercises any policy orprogram decision-making function in connection with the Program are ineligible forassistance under the Program.

. When HOME funds are provided, the Conflict of lnterest provisions at 24 CFR 92.356 shallbe observed.

. Applicant must be willing to correct all code violations that currently exist on the property.

. Priority shall be given to Applicants who have not participated in any City repair orrehabilitation program previously.

. Applicant must be willing to voluntarily relocate at the Applicant's expense during thecourse of reconstruction.

Property Eligibility. Must be a detached single-family dwelling, owner occupied and located within the City of

Dallas city limits.. Applicants must be current in their mortgage and not in default.r Standard property insurance, satisfactory to the City, must be maintained on the property

(with coverage adequate to insure the City's lien position). lf a property is located in afloodplain, as determined by the City of Dallas, in its sole discretion, flood insurance mustalso be maintained with coverage adequate to insure the City's lien position. lnsurancewill be monitored during the length of the compliance period, which will be until the loan isrepaid in full.

. Applicant must certify that the home is not for sale and is the primary residence ofApplicant.

e Must obtain environmental clearance under 24 CFR Part 58.5 prior to committing programfunds.

o Must not have more than one outstanding loan on the property. City will only accept a firstor second lien position. Applicants having a reverse mortgage on the property shall not beeligible for a loan.

. Property taxes must be current. Property taxes must not be delinquent for any tax yearunless the Applicant has entered into a written agreement with the taxing authorityoutlining a payment plan for delinquent taxes and is abiding to the written agreement.

o No liens, except those associated with the first mortgage, shall exist on the property.o Must be a home that requires repairs that exceed 80% of the Assessed Building Value as

determined by the County Tax Office for this program assistance.o lf the property has been reconstructed pursuant to any City program, the propefi is not

eligible for reconstruction under this program.

Eligible Repair lmprovementsEligible improvements under the HRP include the demolition of the existing single-family homeand reconstruction of a replacement single-family home.

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191854Terms of AssistanceHRP assistance is provided in the form of a loan. Applicant must certify annually that the home isnot for sale and is the primary residence of the Applicant until the loan is repaid to the City in full.Applicant must also correct all code violations that exist on the property. The maximum loanamount is subject to City established underwriting criteria/requirements and shall not exceed aloan to value ratio of 85 percent for all outstanding loan obligations secured by the property. Loanrepayment is based on the following:

The affordability period for the Housing Reconstruction Program shall be 20 years.

ln addition to execution of a loan agreement, execution and recordation of a deed of trust, deedrestriction, and a note will be required. Applicant may repay the HRP loan at any time withoutpenalty. Loans are immediately payable upon the earlier of:

o The sale, conveyance, transfer, rental, hypothecation of the security; orr lf the home is vacated during the term of the loan; oro Failure to adhere to the provisions of the loan agreements; oro Failure to adhere to the provisions under the City's deed restrictions, deed of trust and/or

the note.

HRP loans are not assumable except under the following limited circumstances:

o Transfer of property to a surviving spouse;. Transfer of property to an heir(s);o Transfer of property where a spouse becomes the sole owner of the property;. Transfer of property resulting from a decree of dissolution of marriage, legal separation or

from incidental property settlement agreement;o Transfer to a Family Trust in which the borrower remains the beneficiary and occupant of

property.

All transfers must be approved by the City. Any person that would like to assume the loan mustincome qualify and utilize the assisted property as their primary residence. lf such person doesnot meet the income requirements of the program or does not utilize the property as their primaryresidence, then the full loan amount is due immediately and payable, in full, to the City.

Assistance Limits

The maximum amount of assistance provided shall not exceed seventy-five percent (75"/.) of theHUD HOME Value Limits for new construction. The City Manager or designee may on a case bycase basis administratively approve (without Economic Development and Housing Committeeapproval) additional assistance not to exceed ten percent (10%) above the maximum limit for anyOwner-Occupied Rehabilitation or Reconstruction project under the following circumstances:

o To address outstanding repairs or necessary work to close out an existing project;

Housing Reconstruction Program Loan Term

Housing Reconstruction Program 20

ffiEIreEIEE

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1 918 64

. The need to provide reasonable accommodations in accordance with the Americans withDisabilities Act or other local, state or federal law;

o Unanticipated costs deemed necessary to meet applicable City Codes;. Unforeseen environmental issues; and. Addressing issue that threaten life, health, safety and welfare of the public.

It should be noted that the Owner-Occupied Rehabilitation and Reconstruction establishesmaximum per unit thresholds below the HUD required maximum per-unit dollar limitationsestablished under HUD Section 234 Condominium Housing Limit. Thus, no individualprojectunder this program can exceed these HOME maximum subsidy limits.

HRP loan funds may be used to complete project-related hard costs such as demolition andconstruction costs and designated soft costs of architectural and engineering fees. All otherproject-related soft costs shall not be included as part of the loan provided to the applicant. Thesecosts may be provided by the City as part of its delivery costs. These costs are program deliverycosts of the City, such costs will not be included in the loan amount.

The level of assistance shall be limited to the amount required to address the reconstruction workscope as defined by the City and shall not exceed the maximum allowable funding level. The CityManager or designee may on a case by case basis administratively approve (without City Councilor Economic Development and Housing Committee approval) additional assistance not to exceedten percent (10%) above the maximum limit for any of the following circumstances:

. To address outstanding repairs or necessary work to close out an existing project;o The need to provide reasonable accommodations in accordance with the Americans with

Disabilities Act or other local, state or federal law;o Unanticipated costs deemed necessary to meet applicable City Codes;. Unforeseen environmental issues; ando Addressing issues that threaten life, health, safety and welfare of the public.

HUD establishes maximum per unit thresholds which are below the HUD required maximum per-unit dollar limitations established under HUD's Section 234 Condominium Housing Limits. Thus,no individual project under this program can exceed these HOME maximum subsidy limits.

Credit and Underwriting StandardsThe following are the credit and undenruriting standards for HRP Loans:

. Chapter 7 or Chapter 13 bankruptcy is not allowed if primary or any mortgage is includedas a secured creditor on the subject property for which the City will place a lien securingthe loan.

. Qualifying debt to income ratios are 26-30"/o on the front end and 43o/o on the back end.o Properties with a reverse mortgage are not eligible for Program funding. A maximum loan-to-value ratio of 85"/"for all loan obligations inclusive of the City loan is

allowed on HRP loans.

RelocationRelocation costs will not be paid by the City.

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'l 91864Administration

Staff shall administer HRP. The administration of HRP includes, but is not limited to applicationevaluation procedures, assessments, cost estimation, bid solicitation, contractor selection,construction management, inspection, disbursement of program funds and processing of noticesof completion, and other duties as established in the program guidelines as well as the policiesand procedures.

The Director shall be responsible for ensuring that all programs are implemented in accordancewith all applicable policies and regulations.

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Dallas Homebuyer Assistance ProgramAdded/amended June 26, 2019 by Resolution No. 19-1041

Provides homeownership opportunities to low- and moderate-income homebuyers (defined as"Applicant' for this program) through the provision of financial assistance when purchasing ahome, in accordance with federal, state and local laws and regulations.

EligibilityApplicant must meet the following criteria

. Property must be located in the city limits of Dallas.

. Applicant's projected annual income must be no less than 60% of Area Median lncome,but not exceed 120% of the Area Median lncome, adjusted for household size, at the timeof application to the program. lncome eligibility shall be determined at the time of theapplication. Applicant household's income eligibility is only valid for six months from thedate of the last application.

. Applicant must have acceptable credit. High cost or sub-prime loans, adjustable ratemortgages, interest only loans are not allowed.

. Applicant must demonstrate that Applicant has at least two months of cash available andequal to Applicant's projected monthly mortgage payment, including principal, interest,taxes, insurance, and any associated fees.

. Applicant household must be U.S Citizens or legal residents and possess a valid socialsecurity card.

. City Council Members, Department of Housing and Neighborhood Revitalizationemployees and any employee, official or agent of the City who exercises any policy orprogram decision-making function in connection with this program are ineligible forassistance under this program. This policy extends for a period of 12 months beyond anindividual's disassociation with the City in such a capacity.

o When HOME funds are provided, the Conflict of lnterest provisions at 24 CFR 92.356 shallbe observed.

e Property to be purchased must be for the primary residence of Applicant. Applicant mustcertify that the home is not for sale and will be the primary residence of Applicant.

. Applicant must attend an 8-hour homeownership education class from a HUD certifiedcounseling agency within 12 months of application for assistance.

. Applicant must make a minimum initial cash investment of $1,000 toward purchase ofhome.

. The property must meet federal and local requirements, including but not limited toMinimum Housing Standards, Environmental Review, and international residentialcode.

Eligible PropertiesThe property can be privately or publicly owned prior to sale to the Applicant. The property mustbe within the Dallas, Texas city limits and meet City building codes, lead based paintrequirements, and environmental standards at the time of initialoccupancy. All liens must be paidoff at or before closing.

The property must contain adequate living and sleeping space for the Applicant household asverified by the property appraisal, site visit, and/or Dallas Appraisal District Data. The propertybeing purchased must be appropriately sized to the Applicant household.

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191864The occupancy standard is 2 persons per bedroom, meaning that there must be onebedroom for every two household members. For single member households, there mustbe at least one bedroom.The maximum bedroom number may be the above standard, plus one bedroom. Forexample, if under the above occupancy standard an applicant would require twobedrooms, under this program they would be able to purchase a home with threebedrooms.

Applicants interested in purchasing housing that exceeds these requirements will still be eligiblefor assistance, but will not be eligible for maximum assistance, under this program.

The property can be an existing property, or it may be newly constructed. The property can be:

. Single-family property (one unit); or

. Condominium or cooperative unit

An appraisal is required and may be provided by the first mortgage lender or Applicant. Theappraisal value of an assisted property to be acquired for this activity cannot exceed the HOMEValue Limit for Dallas. This limit is updated annually. The sale price of an assisted property maynot exceed the "Appraised Value".

Affordability PeriodsThe residence must remain affordable for a certain period of time, which is dependent on theamount of funds invested. The City's recapture provisions will apply.

Eligible ExpensesEligible expenses may include: principle reduction, down payment and closing cost assistance. lfthe house is sold before the required affordability period has elapsed, the assistance funds mustbe recaptured on a pro-rated basis.

Terms of Assistanceo The assistance for the Dallas Homebuyer Assistance Program will be offered in the form

of a deferred, forgivable loan, which shall be forgivable annually based on the affordabilityperiod, subject to the terms of the contract.

. ln the event of any of the following occurring prior to the completion of the affordabilityperiod the balance is payable immediately on a pro-rated basis.o The sale, conveyance, transfer, lease, rental, hypothecation of the security, or any part

thereof, or any interest therein, or divestment of title or any interest therein in anymanner or way, whether voluntarily or involuntarily, without the prior written consent ofthe City being first had and obtained; or

o Failure to adhere to the provisions of the contract; or

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Less than $15,000 $ Years

$15,000 to $40,000 Ito YearsCver $40,000 Its Years

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191864o Failure to adhere to the provisions under the City's deed restrictions, deed of trust

and/or the note, or any other lien encumbering the property.Applicant must certify annually that the home is not for sale and is the primary residenceof the Applicant until the affordability period ends.lf there is an underlying development agreement associated with the property, additionalrequirements may apply. Such determination is made by the City.

Credit and Underwriting StandardsFollowing are the credit and undenruriting standards for Applicant:

r No Chapter 7 or Chapter 13 bankruptcy if primary or any mortgage is included as asecured creditor on the subject property for which the City will place a lien securing theloan.

o Predatory lending describes lending practices that take advantage of clients by chargingusurious interest rates or excessive fees and penalties. Loans will not be made with aninterest rate more than 2"h above the prevailing market rate.

. The maximum assistance available for an Applicant in a High Opportunity Area (of theMVA) is $60,000. ln all other areas, the maximum assistance will be $40,000 perhousehold. Not all Applicants will qualify for the maximum assistance. The assistanceavailable to any given Applicant is based on the City's assessment of the Applicant's need,taking into account the additional criteria outlined below.

o First mortgage amount must have a front-end ratio of 26"/o-320/oo First mortgage amount must have a back-end ratio no higher Ihan 43o/o. Applicants must be qualified by their lender to spend at least 28o/" ol their monthly gross

income on their housing.. lf Applicant purchases a home in a High Opportunity Area, the program will allow a Loan

to Value Ratio as low as 60%.. lf Applicant purchases a home in a non-High Opportunity Area, the program will allow a

Loan to Value Ratio as low as 80%.. lf Applicant purchases a home in excess of need (i.e. exceeds minimum occupancy

standards by more than 1 bedroom) the required loan to value ratio will increase by 10o/"(70%in High Opportunity Areas, 90% in non-High Opportunity Areas).

HeirsA loan may be transferred to the heir(s) of the borrower if the heir(s) are income qualified andutilize the assisted property as their primary residence for the remainder of the affordability period.lf the heir(s) do not meet the income requirements of the program and the loan or does not utilizethe property as their primary residence, and the loan is still within the period of affordability, thenthe prorated loan amount is due immediately and payable, in full, to the City.

RefinancingRefinancing for better rate and term is permitted upon prior approval of the City. Refinancing ofrevolving loan accounts, vehicles, credit card debt, or property taxes are NOT allowablerefinancing expenses. Cash out are also NOT allowed.

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1e1854Accessory Dwelling Units(CHP amended December 11,2019; Code amended June 27,2018 by Resolution Nos. 18-0978Aand 18-09788)

Sec. 51A-4.209(bX6) of the Dallas Development Code provides that for single family uses theBoard of Adjustment may grant a special exception to authorize a rentable accessory dwellingunit in any district when, in the opinion of the board, the accessory dwelling unit will not adverselyaffect nei ghboring properties.

ln addition, Sec.51A-4.510 of the Dallas Development Code provides regulations allowing foran accessory dwelling unit overlay district. An accessory dwelling unit overlay district is acompact, contiguous area where residents of a single-family neighborhood may petition CityCouncil to create a zoning overlay that, if approved, allows code-compliant accessory dwellingunits by right.

Homebuyer lncentive Program

This program offers financial assistance for schoolteachers, police officers, emergency medicaltechnicians, and fire fighters which purchase a property within one of the targeted areas. Bypurchasing a home in one of the targeted areas, then repayment of the loan shall be due onlyupon re-sale or transfer, and contingent upon maintaining owner occupancy for a 10-year period.

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LANDLORD PROGRAMSRental Rehabilitation(Amended June 26,2019 by Resolution No. 19-1041)

The Home lmprovement Preservation Rental Program is an all-inclusive repair and rehabilitationprogram for single-family (1-4) rental units. lt offers a repayment loan program to landlords wholease to low-income households, with the purpose of making needed improvements andpreserving affordable housing (sometimes referred to as the "HIPP Rental Program"). HIPPRental Program is designed to finance improvements and address health, safety, accessibilitymodifications, and structural/deferred maintenance deficiencies.

Program AdministrationStaff shall administer the HIPP Rental Program. The administration of the HIPP Rental Programincludes application evaluation procedures, rehabilitation assessments, cost estimation, bidsolicitation, contractor selection, management of the rehabilitation, inspection, disbursement ofprogram funds and processing of the notice of completion, and other duties as established in theprogram guidelines as well as the policies and procedures.

The Director shall be responsible for ensuring that the HIPP Rental Program is implemented inaccordance with all applicable policies and regulations.

Applicant Eligibility

Applicant must be the owner of the rental unit(s) to be rehabilitated or reconstructedand provide a deed showing the conveyance, or similar documentation acceptableto the City in its sole discretion, that proves ownership in fee simple. Applicant mustprovide a copy of the lease agreement with its tenant.Applicant and tenants must be a U.S. Citizen or lawful Permanent Resident, have avalid Social Security card, and current Texas State issued identification card orDriver License.The tenants of the unit to be repaired must have a gross annual household incomeat or below the applicable low- and moderate-income limits (<80% AMI) asestablished by HUD for the jurisdiction of Dallas, Texas. lncome shall be calculatedusing the Part 5 method as outlined in 24 CFR 5.609. Income eligibility shall bedetermined at the time of the application. Applicant household's income eligibility isonly valid for six months from the date of the last application.Where property improvements are to be performed which are not limited to theinterior of a specific unit, then 51o/" ol all units on the property must meet thepreceding income eligibility requirements.Applicant must be willing to correct all code violations that currently exist on theproperty.City Council Members, Department of Housing and Neighborhood Revitalizationemployees and any employee, official or agent of the City who exercises any policyor program decision-making function in connection with the Program are ineligiblefor assistance under the Program.Applicant must adhere to the Dallas City Code, including but not limited to Section20-A and comply with HUD HOME rent limits and other applicable federalregulations.Priority shall be given to Applicants who have not participated in any City repair orrehabilitation program previously.

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Property Eligibility

1. The property must be a single-family (1-4 units) renter occupied dwelling locatedwithin the City of Dallas, Texas city limits. Properties with over 4 units are not eligiblefor rehabilitation assistance under this program.

2. Applicant(s) must be current in their loan.3. Must obtain environmental clearance under 24 CFR Part 58.5, as amended prior to

committing rehabilitation funds.4. Property taxes must be current. Property taxes must not be delinquent for any tax

year unless the Applicant has entered into a written agreement with the taxingauthority outlining a payment plan for delinquent taxes and is abiding to the writtenagreement.

5. Applicant must certify that the home is not for sale and is occupied by an incomeeligible tenant.

6. Standard property insurance, satisfactory to the City, must be maintained on theproperty (with coverage adequate to insure the City's lien position). lf a property islocated in a floodplain, flood insurance must also be maintained with coverageadequate to insure the City's lien position. lnsurance will be monitored during thelength of the compliance period, which will be until the loan is repaid in full.

7. Must not have more than one outstanding loan on the property. City will only accepta first or second lien position. Applicants having a reverse mortgage on the propertyshall not be eligible for a loan.

8. Repairs must conform with designated as eligible improvements under the programL For rehabilitation, Applicant's property was previously assisted with City funds and

the property is still within the period of affordability, per the written agreement withthe Applicant or previous owner, Applicant will not be eligible to receive funding forthe same property.

10. No liens, except those associated with the first mortgage, shall exist on theproperty.

11. Must be a home that requires repairs that exceed fifty percent (50%) of its value.

Terms of AssistanceThe maximum loan assistance amount under the HIPP Rental Program is $40,000.

HIPP Rental Program funds may only be used to complete the project-related hard costs such asconstruction costs. Project-related soft costs such as hazardous materials testing fees, documentrecordation fees, inspection/construction management fees, escrow fees shall not be included aspart of the loan provided to the Applicant. These costs shall be provided by the City as part of itsdelivery costs. These costs are program delivery cost of the City, such cost will not be included inthe loan amount. Applicant must certify annually that the home is not for sale and is the primaryresidence of the tenant until the loan is repaid to the City in full. Applicant must also correct allcode violations that exist on the property.

The level of assistance shall be limited to the amount required to address the rehabilitation workscope as defined by the City and shall not exceed the maximum allowable funding level of$40,000.00. The City Manager or designee may on a case by case basis administratively approve(without City Council approval or Economic Development and Housing Committee approval)additional assistance not to exceed 10% above the maximum limit for the HIPP Rental Programunder the following circumstances:

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191864

o To address outstanding repairs or necessary work to close out an existing project.o The need to provide reasonable accommodations in accordance with the Americans with

Disabilities Actor other local, state or federal law;o Unanticipated costs deemed necessary to meet applicable City Codes;. Unforeseen environmental issues; ando Addressing issues that threaten life, health, safety and welfare of the public.

It should be noted that HUD establishes maximum per unit thresholds below the HUD requiredmaximum per-unit dollar limitations established under HUD's Section 234 Condominium HousingLimits. Thus, no individual project under this program can exceed these HOME maximum subsidylimits.

Terms of AssistanceThe terms of assistance to Applicants of the HIPP Rental Program will be in the form of a threepercent (3%) interest rate loan. lf the ApplicanVlandlord does not comply with the requirementsset out in this program, including but not limited, leasing to households at or below eighty percent(80%) AMl, then the full loan shall be immediately due and payable in full to the City. lf the propertyis transferred through sale during the term of the loan, the balance shall also be immediately dueand payable to the City in full. The maximum loan amount is subject to City establishedunderwriting criteria/requirements and the lower of either a loan to value ratio not exceeding 85percent for all outstanding loan obligations secured by the property, or 80"/" of the AssessedBuilding Value as determined by the County Tax Office. The City loan is secured by a first orsecond lien on the property.

The affordability period for the HIPP Rental Program loans shall conform to the affordability termas defined in the above table. During the period of affordability, monitoring of tenant occupancyand affordability for assisted rental properties shall be performed on an annual basis. Applicantshall also be required to provide on-going proof of insurance to the City, with the City as an addedinsured. ln addition to execution of a loan agreement, execution and recordation of a deed oftrust, deed restriction, and a note will be required.

Applicant is required to ensure that occupancy for all assisted units is maintained by tenants thatare income qualified at 80% of AMlor lower, and at rental rates that are consistentwith the currentHOME rents.

Upon transfer of the property, whether voluntary or involuntary, Applicant shall repay the City inaccordance with the recapture provisions that apply to the Dallas Homebuyer AssistanceProgram.

Applicant may repay HIPP Rental Program loans at any time without penalty. However,repayment of the loan shall not release Applicant of the affordability requirements discussedabove. Loans are immediately payable upon the earlier of:

Affordability Period

Less than $5,000 5

$5,000 to $40,000 10

kiEEilffitlrilt 4@il@

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191864

. The sale, conveyance, transfer, rental, hypothecation of the security; oro Failure to adhere to the provisions of the loan agreements; oro Failure to adhere to the provisions under the deed restrictions, the deed of trust and/or the

note.

HIPP Rental Program loans are not assumable except under the following limited circumstances

. Transfer of property to a surviving spouse;o Transfer of the property to an heir(s);o Transfer of property where spouse becomes the sole owner of the property;o Transfer of property resulting from a decree of dissolution of marriage, legal separation or

from incidental property settlement agreement;o Transfer to a Family Trust in which the borrower remains the beneficiary and occupant of

property;o Transfer of the property to another individual, partnership or entity.

All transfers must be approved by the City. Any person that would like to assume the loan mustincome qualify and utilize the assisted property as their primary residence. lf such person doesnot meet the income requirements of the program or does not utilize the property as their primaryresidence, then the full loan amount is due immediately and payable, in full, to the City.

Credit and Underwriting StandardsThe following are the credit and underwriting standards for HIPP Rental Program loans:

o Chapter 7 or Chapter 13 bankruptcy is not allowed if primary or any mortgage is includedas a secured creditor on the subject property for which the City will place a lien securingthe loan.

o Qualifying debt to income ratios are 26-320/o on the front end and 43o/o on the back end.o Properties may not have more than one outstanding loan on the property. The City will not

accept a lien position lower than a second lien.o Properties with a reverse mortgage are not eligible for HIPP Rental Program funding.e A maximum loan-to-value ratio of 85Y" tor all loan obligations inclusive of the City loan is

allowed on HIPP Rental Program loans.

Tenant Relocation During the Affordability Periodlf a tenant relocates for any reason during the affordability period, the Applicant shall have theresponsibility of obtaining a new tenant that meets all HIPP Rental Program requirements, subjectto approval of the City.

Eligible Repair lmprovementsUnder the HIPP Rental Program, rehabilitation activities will include only items necessary to bringthe structure into compliance with the City's written rehabilitation standards and applicable localresidential codes; but will also include items recommended as necessary to preserve theproperty's structural integrity, historic integrity, weatherization, and quality of living conditions. Thescope of work must address all major systems to ensure that they have a remaining useful life ofa minimum of 5 years at project completion. Major systems are identified as structural support(foundation); roofing; cladding and weatherproofing (e.9., windows, doors, siding, gutters);plumbing; electrical; and heating, ventilation, and air conditioning.

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To the extent the City's loan does not bring the property up to the City's Minimum PropertyStandards, the Landlord is responsible for such repairs.

lmprovements to or demolition of an accessory structure such as detached garage, work shed,or small residential structure will be made on a case by case basis depending on the availablebudget, grant requirements, planning requirements, current building codes, health and safetyconcerns, and minimum occupancy requirements of residents of the property.

Assistance to remove any items from the property that are considered to be dangerous,hazardous, or a violation of local code are eligible when performed in conjunction with the eligiblerehabilitation of the property.

Assistance may not be used for the purchase or repairs of appliances (except for energy efficientwindow units) or renovations not necessary to bring the home up to local code or propertystandards. Ineligible repairs include but are not limited to luxury and recreational items (granitecounter tops, swimming pools, spas, high end fixtures); tree trimming; fences; and landscaping.

Eligible improvements under the HIPP Rental Program requirements include the following:o Correction of code violations and elimination of specific conditions detrimental to public

health & safety identified by the Cityr Correction of incipient violations of the City of Dallas Building Codeso Cost effective energy conservation measures, including solar heating, cooling & water

systems permanently affixed to dwelling. Testing & treatmenVremoval of lead-based painVasbestos hazards. Handicapped lmprovements & removal of barriers to the handicappedo Removal of termites; removal of rodents and roaches (pest control), but may not be a

stand-alone costo Replace/repair roofingo Replace/repair HVAC systems. Replace/repair plumbing/sewer pipes/kitchen and bath fixtures. Replace/repair window and/or door screenso lnstall new smoke alarmso lnstall new insulation. Replace/repair flooring and carpeting. Replace/repair water heaters. Replacelrepair electrical system and installation of GFCIso Replace/repairwindows. Replace/repair plaster, siding and stuccoo Painting (inside and outside)o lnstall new deadbolt locks. Replace/repair kitchen or bath cabinets and countertops. Replace/repair garage doorsr Structural repairs/modifications (only to correct existing structural code deficiencies or to

provide accessibility to disabled persons);. Foundation repairs. Any items determined eligible by the Director

Temporary Relocation During RehabilitationRelocation is not contemplated for rehabilitation activities, however if an unanticipated event

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occurs which requires temporary relocation, Applicant shall be responsible for the relocation-related expenses and fees. Applicant shall perform such relocation obligations in compliance withthe provisions of the Uniform Relocation Assistance and Real Property Acquisitions Policies Actof 1970 and Section 1Oa(d) and any other applicable state, federal, or local laws/regulations.

Mortgage and RefinancingAssistance may be provided to an Applicant who has an existing loan or equity loan if the totaldebt, including mortgage/equity loan balance and all rehabilitation costs do not exceed 85% ofthe after-rehabilitation value of the property for the HIPP and 85% of the after-rehabilitation valueof the property for the HIPP Rental Program. The City deferred loan may be subordinate to theexisting mortgage or equity loan only if these loan-to-value requirements are met. The City loanwill be in no lower than a second lien position. Refinancing will only be allowed upon prior approvalof the City and for favorable rates and terms; no cash out financing will be allowed.

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TENANT PROGRAMS

Tenant Based Rental Assistance

The purpose of this program is to provide supplemental financial assistance to displaced tenantsas a result of the High lmpact Landlord lnitiative (HlLl) to pay the difference between the cost ofrent and the actual affordable amount that the tenant can pay. The program shall be operated ona first come first serve basis. Only HOME funds can be used to fund Tenant Based RentalAssistance (TBRA) programs. This is not an eligible activity under the Community DevelopmentBlock Grant (CDBG) Program.

Eligible UsesEligible costs include: Subsidy is based on the amount of the rent, household income and Cityrent standard in a form of a grant. Covered expenses include:

. Rent supplemental financial assistance:o Utility costs. Security deposits. Utility depositso Maximum assistance ol24 months. May provide security deposit and utility deposit assistance upon exiting the program for a

permanent unit

No payments will be made directly to the tenant household

Prohibited UsesCity of Dallas HOME TBRA funds may not be used to assist tenants in conjunction withhomebuyer programs, including lease purchase programs.

Eligible UnitsEligible tenants may rent any housing that meets the following criteria:

. Located in Dallas City Limitso Meets Minimum Housing Quality Standardso Reasonable rents are chargedo Are not public housing projects or receiving project based federal assistance

Subsidy Amounts and Tenant ContributionMaximum Subsidy: Maximum assistance that can be provided is the difference between 30% ofthe household's adjusted monthly income and the payment standard.

Minimum Tenant Contribution: All tenants are required to pay 30% of their monthly adjustedincome, or $20.00 per month, whichever is greater.

Length of Assistance: Assistance will not be provided for a period of time longer than two years,and minimum of one-year lease.

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Other Tenant RequirementsAgencies administering TBRA programs may require tenant participation in a self-sufficiencyprogram as a condition of rental assistance.

A legitimate, legal lease is required for program participants

lncome Recertificationlncome of tenants receiving HOME tenant based rental assistance must be re-certified on anannual basis, at a minimum. City staff may require recertification of tenant income at any time, atthe City's discretion, if it appears that a tenant's income has changed substantially during thecontract term. lf the tenant's income exceeds eighty percent (80%) of Area Median Familylncome, HOME assistance must be terminated.

Payment StandardThe HOME payment standard will be the Small Area Market Rent, annually established andpublished by the US Department of Housing and Urban Development.

Termination of AssistanceHOME assistance may be terminated if the following occurs:

. Household's income exceeds eighty percent (80%) of Area Median lncome;o Household is evicted from the approved unit by owner for cause;o After receipt of two official notices requesting cooperation in the re-certification process,

the household is unresponsive and uncooperative.

ln all cases above, thirty days' notice of the termination must be provided to the tenant andlandlord.

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DEVELOPER PROGRAMS

New Gonstruction and Substantial Rehabilitation Program

The purpose of this program is to provide financial assistance to new developments or substantialrehabilitation developments, where such assistance is necessary, and appropriately incentivizeprivate investment for the development of quality, sustainable housing that is affordable to theresidents of the City.

Funds may be used for projects to: 1) build new single-family with 5 or more homes, 2) build newmulti-family rental housing with 5 or more units, or 3) substantially rehabilitate multi-family rentalhousing greater than 5 units. The City shall award, when funds are available, through acompetitive Notice of Funding Availability (NOFA) or Request for Applications (RFA) process inaccordance with the program's scoring policy.

EligibilityTo be eligible for funding under the New Construction and Substantial Rehabilitation Programassistance, the proposed project must meet all of the following basic criteria:

Project must consist of 5 or more units located within the municipal boundaries of the Cityof Dallas. Note: Extra Territorial Jurisdictions areas are not eligible forfinancial assistance.Substantial rehabilitation projects must, at a minimum, meet the substantial rehabilitationtest.

ln addition to fully meeting the City's minimum code requirements, a project must meet one ormore of the following Substantial Rehabilitation threshold tests:

o Replacement of two or more major building components (roof; wall or floor structures;foundations; plumbing, central HVAC or electrical system); or

o costs are 15o/" or more, exclusive of any acquisition and/or acquisition and developmentsoft costs, of the property's replacement cost (fair market value) after completion of allrequired repairs, replacements and improvements; or

o rehabilitation hard costs are $10,000 or more per unit.

The after-rehabilitation rents required to effectively support the property, including the additionalrehabilitation project debt service, must be:

o Reasonable, and fallwithin the underwriting standards; ando Affordable and meet the City's definition of affordability.

Owners must exhibit a cash equity participation of at least 1Q"/o in the rental propefi proposedfor rehabilitation. Note: Housing tax credits proceeds are to be treated as equity.

Loan TermsFinancial assistance can be provided in the form of a repayable loan as negotiated on a projectby project basis and demonstrated by the financial underwriting. The City loan is fully repayable,and the interest rate varies by the type of Borrower. The interest rate for a qualified CHDOBorrower or Sponsor shall be zero percent (0%) simple annual interest. The interest rate for aqualified nonprofit BorrowerorSponsors shall be one percent (1%) simple annual interest. The

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base interest rate for all other Borrowers shall be three percent (3%). However, the 3% base ratecan be reduced through a combination of one or more Borrower concessions:

A Borrower guarantee to make annual interest payments will reduce base interest rate by1o/oi

Borrower agreement to limit loan maturity to 20 years or less reduces base interest rateby 1o/o; orBorrower guarantee of annual interest and principal payments reduces base interest rateby 2o/o.

The Borrower can combine a) and b) above to reduce the 3% annual simple interest base interestrate by 2o/" lo the 1"/o annual simple interest floor rate. However, in no instance can the floorinterest rate be less than 1% annual simple interest for a Borrower in this category.

Repayment terms will be negotiated based on project undenruriting and after review of all otherfinancing commitments. Repayment of loan principal and interest should be either:

Equal monthly installments over a period of up to 300 months. Subject to City review andapproval, multi-family projects may have up to 24 months (in addition to the above statedmaturity of 300 months) of deferred principal and interest during a construction and lease-up; or,An annual surplus cash payment. The City's surplus cash loans funding will be structuredwith note provisions requiring that at least 50% of Eligible Cash in excess of $50,000 bepaid annually to subordinate lenders (including funding partners and related parties) on aprorated basis.

Eligible Cash shall be defined as: Surplus cash available for partnership distribution, less anyoutstanding:

o Credit adjusters. Asset management feeso Operating reserve account replenishmento Limited partner loans that have been approved by the Cityo Deferred developer fees. Supplemental replacement reserve deposits approved by the City

Note: lncentive management fees have been deliberately omitted from the above list. Payment ofincentive management fees shall be subordinate to repayment of the City's loan(s).

Additional Requirements for New Construction DevelopmentFor new construction housing developments funded by the City, the maximum subsidy per unit is22.5% of the HUD HOME Value Limit.

Funding will be provided to Community Housing Development Organizations, governmentalentities, or public facility corporations at 0% simple interest, which will be forgiven upon sale ofthe property to home buyer.

ln addition, funding will be provided to other qualified non-profit organizations at 1% simpleinterest, which will be forgiven upon sale of the property to home buyer.

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Projects shall submit, on an annual basis, either HUD Form 93489 (HUD Computation of SurplusCash), or the City's form, with the project audit. The City will invoice the project, allowing forrepayment to occur up to the end of the current calendar year when HUD financing is involved.Otherwise, the surplus cash payment will be due within 45 days of the invoice postmark. Latepayments will be assessed a 5o/o late charge. The loan will be in default if payments are morethan 75 days late. The default interest rate shall be 500 basis points (5%) over the note interestrate.

The City multi-family rental loan is limited to only the amount necessary to fully fund the requiredrehabilitation work, not to exceed nine percent (9%) of the annual HUD Section 234 -Condominium Housing Limits in Dallas, Texas for elevator units (by number of bedrooms perunit). ln 2018, the annual limits were as follows:

. Efficiency - $58,787o l Bedroom-$67,391. 2 Bedroom - $81,947o 3Bedroom-$106,013o 4Bedroom-$116,369

Note: The above table is only valid for 2018 and is otherwise provided for illustrative purposes.Contact the City's Housing Department for a schedule of current HUD 234 Limits.

Affordability Period Requirements for All Rental Housing Development and SubstantialRehabilitation LoansThe Period of Affordability (income and rent restrictions) applies to both single-family and multi-family rental housing projects. Affordability periods shall be set as follows, in keeping with HUDrequirements.

Conditions of All City Loanso The property must be residential rental property under the existing ownership for the entire

loan term. lf the property is transferred by any means during the loan term, the remainingunforgiving portion, plus interest based on the existing market, will become immediatelydue and payable;

o The Borrower must maintain the property according to the Dallas Unified Building Codeand agrees to allow City personnel to annually inspect the property;

o The Borrower provides evidence of having paid annual property taxes and having securedfire and extended insurance coverage for the property;

o Borrower must annually provide the City of Dallas with the information on rents andoccupancy of HOME-assisted units to demonstrate compliance with the affordability rentrequirements;

o The Borrower must maintain reserves for maintenance; andr No further assistance during the affordability period term of the loan, whichever is longer.

Under $15,000/ unit 5 years

$15,000 - $40,000/ unit 10 yearsOver $40,000 or rehabilitation involving refinancing 15 yearsNew construction of rental housing 20 years

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The City loan will be secured by a lien on the property. The lien position will be no less than asecond, except upon approval of the appropriate City Department Director, subordinate only to aprivate financial institution's superior lien for a loan in a greater amount. The City may also requireadditional security for its loan, including, but not limited to, a first lien position on other investmentproperty of the owner, as well as personal and/or corporate guarantees if it is necessary to securethe loan.

The terms of payment will continue throughout the entire term of the note, provided the Borrowercomplies with each and every term and condition of the loan documents. lf the Borrower does notcomply, or if the borrower at any time defaults under the terms of the note, interest on the unpaidprincipal will thereafter:

. accrue at a rate that is 500 basis points over the Note interest rate, and

. be immediately payable in addition to the entire outstanding principal amount

Financial Structuring

GAP FinancingThe City deferred debt (deferred forgivable or surplus cash) only be used for and based upon thefinancing gap on affordable units. The City loan cannot exceed the financing gap.

Balloon MortgagesBallooning senior debt mortgages may require additional mitigating factors depending on overallproject sources and uses, projected loan-to-value, and other risk factors. Under no circumstanceswill the City participate in a transaction where a senior balloon term is less than 15 years.

Surplus Cash MortgagesThe City's surplus cash loans funding will be structured with note provisions requiring that at least50"/" of Eligible Cash in excess of $50,000 be paid annually to subordinate lenders (includingfunding partners and related parties) on a prorated basis.

Eligible Cash shallbe defined as:o Surplus cash available for partnership distribution, less. Any outstanding:r Credit adjusterso Asset management fees. Operating reserve account replenishment. Approved limited partner loans. Deferred developer fees. Approved supplemental replacement reserve deposits

Projects shall submit, on an annual basis, either HUD Form 93489 (HUD Computation of SurplusCash), or the City's form, with the project audit. The City will invoice the project, allowing forrepayment to occur up to the end of the current calendar year when HUD financing is involvedand general HUD distribution guidelines. Otherwise, the surplus cash payment will be due within45 days of the invoice postmark. Late payments will be assesse d a 5o/" late charge. The loan willbe in default if payments are more than 75 days late. The default interest rate shall be 500 basispoints (5%) over the note interest rate.

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Appraisal RequirementsProjects Receiving City First Mortgage Acquisition FinancingPrior to funding commitment, the borrower must provide a completed Appraisal Request Form forCity-Ordered Appraisals by the date specified in the City's notice of funding award, unless thedevelopment is exempt from the appraisal requirement as described below. The establishment ofthe date will take into account the applicable funding source commitment deadline and theBorrower's project timeline.

Developments exempt from the prior to commitment appraisal requirement:e Acquisition price under $100,000. Land only where there is no identity of interest. ldentity of interest is used broadly to

include non-arm's length transactions, related-party transactions, etc.o Single family homes (1-4 family structures) that are aggregated under one loan. The Borrower has provided a Market Studyo The Project is HUD 202 or HUD 81 1 with a funding reservation

Note: Whenever a project is exempt under one of the above provisions, the City will use assessedvalue unless the borrower requests an appraisal for determining acquisition cost as defined inthese Underwriting Standards.

The cost of appraisals must be borne by the Borrower. All costs incurred for the appraisal, andany revisions, will be the responsibility of the applicant. The City will collect the appraisal costsfrom its loan proceeds at closing.

Appraisals ordered by the Borrower will not be accepted. All appraisals must be ordered by theCity, HUD or a designated HUD MAP lender, Fannie Mae or a designated Fannie Mae DelegatedUnderwriter Services (DUS) lender or a regulated financial institution.

An Agency ordered appraisal will be used to support the acquisition costs identified at the time ofapplication. The appraised value will be used by the City and its funding partners in underwritingthe acquisition cost.

An As-ls Appraisal:Land Only for New Construction: Fee simple value of the land. The market value appraisal willconsider the real property's zoning as of the effective date of the appraiser's opinion of value. lfthe real property consists of more than one parcel, the parcels will be combined in one appraisalwith one value conclusion.

Acquisition/Rehab:Fee simple "as-is" value of the existing multi-family property assuming market rate rents. Feesimple, in "as-is" condition, with existing restricted rate rents.

Adaptive Re-Use:Fee simple market value of the property to be adapted for an alternate use. The valuation willassume the highest and best use permitted by law and economically feasible in the currentmarket.

Prior to Closing - Scheduled Payment Loans:For scheduled payment loans, an as-completed appraisal is required to establish loan to valueAn "as-completed and stabilized" appraisal is required for all amortizing loans.

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191864Two hypothetical values are required:

. As completed and stabilized, subject to restricted rentse As completed and stabilized, assuming market rate rents

The lesser of the two values will be used to determine loan to value for the City's underwriting.The City will finance no more than 87"/" of appraised value (85% for loans with $15,000 per unitor less in rehabilitation). Plans and specifications must be sufficiently complete for the appraiserto establish the "as completed" value. The appraisal must be conducted no more than six monthsprior to closing or end loan commitment (or the borrower will be required to pay for an appraisalupdate).

Prior to Closing- Deferred Loans:For non-amortizing loans, the City requires an appraisal prior to closing similar to that required foramortizing loans (above). Borrowers may use another lender's appraisal. Non- Amortizingdevelopments exempt from the prior to closing appraisal requirement include:

. Single family homes (1-4 family) that are aggregated under one loan (the City will useassessed value unless the Borrower requests an appraisal for determining acquisition costas defined in the Borrower's Underwriting Standards.)

Loan ConditionsAs a condition of the City Loan, the Developer must agree:

o To rent these properties in accordance with Affirmative marking standards and the currentHUD Section 8 rental income guidelines for the Period of Affordability and the federalequal housing opportunity requirements in the Fair Housing Act.

r Not discriminate on basis or race, religion or national origin.o Not discriminate against lower income prospective tenants, solely on the basis of their

receipt of Section 8 Housing assistance support.o Not convert the property to condominiums for the duration of the public note.o To maintain the property in a safe, sanitary and decent condition, in compliance with the

City of Dallas Building Codes throughout the term of the public sector note.o To provide evidence of having paid annual property taxes and secured fire and extended

insurance coverage for the property.. Comply with Annual Re-certification of tenant's annual income, which means each year

the property owner must document the income of the tenant by reviewing documents suchas W-2's, pay stubs, etc. in order to ensure that their income meets the low-incomerequirements.

o To a property inspection one (1) year after the rehabilitation and every two (2) yearsthereafter during the period of affordability. The owner must agree to cooperate with andassist in this inspection effort, and to resolve all deficiencies cited within the designatedcorrection period allotted.

. To pay real property taxes and maintain adequate fire and extended coverage insurancewith City named as co-insured on the subject property for the full term of the loan. TheCity will require owner to provide documentation of tax payment and insurance coverageon an annual basis.

. To adhere to Lead-Based Paint Abatement guidelines for all properties built 1978 andbefore.

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The City will examine the sources and uses for each project and determine whether the costs areeligible and reasonable, the return to the developer is appropriate (not excessive); and the othersources of funds needed for the project are firm commitments. "Reasonableness" of developmentcosts should be based on the following factors:

o Costs of comparable projects in the same geographical area;. Qualifications of the cost estimators for the various budget line items; ando Comparable costs published by recognized industry cost index services

Failure to comply with any of the conditions outlined above will constitute a default of the publicsector loan, requiring the balance to become immediately due and payable.

During the term of the public sector loan, if the property is sold, or ownership transferred throughany means, then the balance of the note then owning, including the remaining deferred forgivableportion is immediately due and payable in full.

For HOME projects, a determination of fixed or floating HOME units must be made at the time ofLoan commitment. Fixed units must remain the same throughout the period of affordability.Floating units may change in order to maintain conformity so that the total number of units meetthe required number of bedrooms to the originally designated HOME-assisted unit.

Loan ClosingThe property owner will be required to provide the following items for loan closing:

. For substantial rehabilitation projects, the after-rehabilitation appraisal of the propertyshowing the appropriate value relative to the proposed loan.

. Acceptable Commitment for Title lnsurance Policy showing the City's interest in the totalamount of the City's Deferred Payment Loan.

o Credit Reports on all Borrowers with a 15o/o or greater ownership interest.o List of all real property assets and their value.. An acceptable bid from an approved contractor. The approved contractor must be

licensed, and provide proof of appropriate insurance coverage, covering the total cost ofthe

o rehabilitation work and including, but not limited to worker's compensation, generalliability, and personal liability.

. Copy of the insurance policy for fire and extended coverage for 80% of the value of theproperty with City named as co-insured.

Permitted Rehabilitation Program CostsCDBG or HOME funds will be used to support only the following eligible costs:

Actual rehabilitation costs necessary to correct substandard conditions to comply with theCity of Dallas building Codes, federal environmental conditions standards, and federallead-based paint abatement requirements.Essential improvements including energy conservation-related repairs, and improvementsto permit use of the rehabilitated units by persons with disabilities.Repairs to major building system in danger of failure.

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191 I54Costs, generated by the public sector, for processing and closing the financing for theproject, such as: credit reports, fees for title evidence, fees for recordation and filing oflegal documents, attorney's fees, permits, and appraisalfees.Cost for the relocation of tenants currently residing in the property at the date of initialapplication, who must be temporarily or permanently displaced as a direct result of therehabilitation activity.

I nvoluntary DisplacementThe City prohibits involuntary displacement of residents from developments receiving funding. lfa development receives federalfunds, the Uniform Relocation Act provisions will apply.

Eligible CostsThe following costs may be reimbursed with HOME funds

CDBG funds may not be used for new building construction, in accordance with HUD regulations.However, CDBG funds may be used for all other reasonable and eligible costs in the above table.

MonitoringThe City is required by HUD to obtain information on rents and occupancy of HOME - assistedunits to demonstrate compliance with the affordability rent requirements on an annual basis.

Additional Requirements for ALL Rental Housing Projects

Te n ant Se I ecti on/EI ig i b i I ity :An owner of rental housing assisted with HOME or CDBG funds must adopt written tenantselection policies and criteria that:

are consistent with the City's goal of providing housing for very low-income and low-income families;are reasonably related to program eligibility and the applicant's ability to perform theobligations of the lease;provide for the selection of tenants from a written waiting list in the chronological order oftheir application, insofar as is practicable; andgive prompt written notification to any rejected applicant stating the grounds for therejection

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Land and Structure Acquisition lFinancing Fees & credit reportsSite preparation, including demolition lAffirmative marketinq, initial leasins & marketinq costsConstruction Materials and Labor fitle binders and insurance

lPerformance bonds and surety fees

lRecording fees

lLegal & accounting fees

lAppraisalslEligible Soft Costs

lEnviron mental reviews

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lncome Eligibility and Re-certification:Tenant incomes must be re-certified annually and verified with source documents every six years.lf the income of a household in an assisted unit rises above 80% of Area Median lncome, thehousehold may continue to rent the unit and the household must pay monthly rent equal to thelesser of:

. The rent permitted by state law; ort 30"/o of the family's adjusted monthly income at annual re-certification.o lf the project was financed with Low lncome Housing Tax Credits, the tax credit rent

prevails.

Acceptable Rents for HOME Projects OnlyThe HOME program has established rules in relation to acceptable rents. There are two rentstandards: High HOME Rent and Low HOME rent. For properties with five (5) or more HOMEassisted united, at least 20% of the units must have rents that meet the "Low HOME" criteria.

High HOME Rent: lesser of the Section 8 Fair Market Rents for existing housing OR thirty (30)percent of the adjusted income of a family whose annual income equals 650/o of the area medianincome.

Low HOME Rent: Thirty percent of the tenant's monthly adjusted income OR thirty percent of theannual income of a family whose income equals 50% of the area median income.

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Mixed lncome Housing Development BonusAdded December 11,2019, Code amended March 27,2019 by Resolution No. 19-0429

BackgroundOn March 27,2019, City Council approved amendments to Chapter 51A of the DallasDevelopment Code to allow by-right development bonuses to incentivize new mixed-incomerental development. These by-right bonuses are available in MF - Multifamily Districts and MU -Mixed Use Districts, specifically MF-1(A), MF-2(A), and MF-3(A) Multifamily Districts and MU-1,MU-2, and MU-3 Mixed Use Districts. Today, these districts represent approximately 15,000 acresacross the city.

The development bonus and number of reserved units required to attain that bonus vary by thelocation of the development under the City's Market Value Analysis (MVA) categories. Propertiesin A, B, and C categories are required to serve families at lower income levels than properties inG, H, and I categories, with the percent of reserved units related to the amount of the bonusrequested and the income ranges depending on the MVA category.

. A,B,C:o 5o/o of units at 51"/o-600/0 Area Median lncome (AMl),o 5"/" of units at 510/o-60%" AMI & 5"/" at 61-80% AMl, oro 5o/o of units at 51Vo-60o/o AMI & 5o/o al61-80% AMI & 5"/" al81-100% AMI

. D,E,F:o 5"/" of units at 61%-80% AMl,o 10"/" of units at 61"/"-80"/" AMl, oro 10/" of units at 610/c-80'/" AMI & 57o al81-100% AMI

o G,H, l:o 5o/o of units at 81-100% AMI

The bonuses vary by type of zoning district and by the additional development rights that wouldbe most likely to incentivize development.

. ln MF-1(A) and MF-2(A) Multifamily Districts, the percentage of reserved units requiredincreases with height and lot coverage.

o ln MF-3(A) Multifamily Districts, the percentage of reserved units required increases withheight, lot coverage, and density.

. ln MU-1 and MU-2 Mixed Use Districts, the percentage of reserved units increases withincreases in density. Base floor area ratios (FAR) apply to non-residential use only.

. ln MU-3 Mixed Use Districts the percentage of reserved units increases with an increasein FAR and a small increase in lot coverage.

ln alldistricts:o Building heights are subject to residential proximity slopes, where applicable, and existing

setbacks are maintained.. For multifamily uses, parking is reduced lo 1% space per unit (versus one space per

bedroom in Chapter 51A) and at least 15 percent must be available for guest parking.. Developments with transit proximity receive an additional parking reduction and additional

lot coverageo Reserved units must be provided on-site, dispersed throughout the development and the

unit mix, and be comparable to the market rate units.

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Design standardsAdditional design standards can reduce auto dependency, reduce the need for parking,encourage alternative modes of transit, and improve transit accessibility, particularly for transit-dependent residents. Design goals include:

o Minimal surface parking, mostly in the side and rear of the loto Ground-floor entrances that open directly to sidewalk or open spaceo Wide sidewalks and pedestrian lightingo Parking structures wrapped by other uses. Only short fences with pedestrian gates are allowed between the front of the building and

the street.o A minimum of 10"/o ol the site provided as open space

lmplementationThe regulatory framework for the mixed income housing development bonus is found in Chapter20A Art. ll of the Dallas City Code.

Procedurese Developer meets with the City's Department of Housing and Neighborhood Revitalization

to request an MVA category verification. The MVA category determines the bonuses thatthe development may utilize in return for a specified number of reserved units.

o Developer begins the permit application process.o Before the issuance of a building permit, developer submits an official copy of the

executed and filed restrictive covenant.o Before beginning leasing, developer begins compliance process, including following the

approved affirmative fair housing marketing plan and reserving units according to therestrictive covenant.

o Developer completes construction and submits documentation for a final certificate ofoccupancy. City reviews for compliance with all aspects of the permit and, if complete,issues final CO.

o Developer (and all subsequent owners) submits compliance paperwork regularly duringperiod of compliance. Requirements stay with the development, not the ownership.

o Ongoing compliance is monitored by the Housing and Neighborhood RevitalizationDepartment and the Office of Equity and Human Rights.

o Developer (and all subsequent owners) may not discriminate on the basis of source ofincome. This non-discrimination provision provides housing opportunities for householdswith rental assistance or vouchers, as applicable.

Program Operation and Complianceo Term of affordability is 20 yearso Property owner must remain in compliance with restrictive covenant based on the

requirements in Chapter 20A-ll and Chapter 51A-4.1100.o Each eligible household must be charged an affordable rent, which is defined as a monthly

tenant rental housing payment, less an allowance for utilities, that does not exceed 30percent of an eligible household's adjusted income.

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Land Transfer ProgramAdded May 22,2019 by Resolution No. 19-0824

The purpose of this Land Transfer Program (the "Program") is to incentivize: (1) the developmentof quality, sustainable housing that is affordable to the residents of the City and (2) thedevelopment of other uses that complement the City's Comprehensive Housing Policy, economicdevelopment policy, or redevelopment policy. Specifically, this Program authorizes the City to sellqualifying city-owned real property and resell tax-foreclosed real property to for-profit, non-profitand/or religious organizations in a direct sale at less than fair market value of the land, consistentwith the authorizing state statute or city ordinance.

The sale of real property pursuant to the Land Transfer Program will enable the City to facilitatethe development of housing units that will be offered for sale, lease or lease-purchase to low- andmoderate-income households and, on appropriate parcels of land, enable the City to facilitate thedevelopment of commercial uses such as neighborhood retail.

Consistency with City's Affordable Housing Development GoalsThe operation of the Land Transfer Program shall align with the City's existing affordable housingproduction goals as outlined in the adopted Comprehensive Housing Policy. The portfolio of realproperty sold under this Program shall be developed to serve the range of income bands as wellas the percentage of each income band identified in the production goals of the ComprehensiveHousing Policy.

When seeking City Council approval to sell a parcel or parcels of real property pursuant to thisProgram, staff must identify the proposed developer, indicate the income band for which theparcel(s) of real property is reserved, and provide the City Council with a map depicting thelocation of the real property that contains the current Market Value Analysis (MVA) and Raciallyand Ethnically Concentrated Areas of Poverty (F/ECAP) data layers, if such layers exist. The mapmust also depict the location of all parcels of real property previously sold to the proposeddeveloper pursuant to this Program or any other City affordable housing program in the past twoyears and the income bands for which each parcel of real property was reserved.

On an annual basis, the Housing and Neighborhood Revitalization Department, or its successordepartment, shall brief the appropriate City Council committee regarding the year-to-dateproduction data for the Program.

Consistency with Fair Housing LawsOn an annual basis, the Land Transfer Program will be reviewed by the Office of Equity andHuman Rights, or its successor department, to ensure that the Program is being operated in amanner that is consistent with fair housing laws. The City will collect and maintain data regardingthe location of parcels of real property sold via the Program and demographic informationregarding the eligible households who occupy housing units developed pursuant to the Program.

Application Process for Submitting a Proposal to Purchase Parcels of Real PropertyThe City will create, and will periodically update, an application that is consistent with this Programand the authorizing state statute or city ordinance to be used by developers who are interested inpurchasing real property pursuant to the Land Transfer Program. The City may accept proposalsto purchase lots on a rolling basis or may solicit purchase proposals through a competitivesolicitation process. Only proposals that meet or exceed the minimum developer and project

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eligibility criteria will be referred to the appropriate City Council Committee for approval. CityCouncil must approve all sale of real property through the Land Transfer Program.

Each purchase of real property must clarify which Texas statute it is operating under.

Developer Eligibility CriteriaTo be eligible to purchase real property pursuant to the Land Transfer Program, a developer mustmeet all the following criteria, unless the land is sold pursuant to Dallas City Code Section 2-26.4:

r Developer may be an individual, or may be organized as a corporation, partnership, jointventure or other legal entity, regardless of whether developer is a for-profit, non-profit, orreligious organization.

. Developer must be in good standing with the State of Texas and the City, including thatthe City has not issued a charge against the developer for violating Chapter 20A of theDallas City Code or Chapter 46 of the Dallas City Code within the past 5 years, may notbe debarred under the federal System for Award Management (SAM), may not haveuncured violations of Chapter 27 oI lhe Dallas City Code for which it has received notice,may not be indebted to the City or delinquent in any payment owed to the City under acontract or other legal obligation, and must be current on payment of taxes and liens owedto any other affected taxing unit under the Texas Property Tax Code.

o lf developer seeks to purchase two or more parcels of real property for the purpose ofconstructing housing units, developer must have constructed one or more housing unitswithin the three-year period preceding the submission of the proposal to acquire theparcels of real property via the Program. lf developer seeks to purchase one or moreparcels of real property for the purpose of developing a multifamily or commercial use,developer must demonstrate that it has developed at least one comparable use within thethree-year period preceding the submission of the proposal to acquire the parcel of realproperty via the Program.

. Developer must submit a development plan for all parcels of real property developer seeksto acquire via the Program.

o Developer must demonstrate that it has the financial capacity and staffing/sub-contractorcapacity to develop and complete the sale, lease or lease-purchase, within a two-year

Type of Property Type of Developer Uses termlow/mod income

Defines targetedrncomeS

Type of DevelopmentAllowed

Add'l state statutoryrequirements

)cc2-26laka HB 1101

lax-foreclosed or;eized Nonprofit ^ow-rncome 80% AMFI or below \ffordable housins

:nabling Statute: TLGC

2 53.010

253,010\ny land acquired bynunicipalitv

Non'profii and-eligious

)rganizations -ow-rncome

Municipality mayCetermine; Should:onsider AMFI

\ffordable housing or a use

rpproved in a writtenlqreement with Citv

I'LGC 272.001{a}

Any city'owned land

3xcept land acquiredoy condemnation !o limitation

.ow- and Mod-ncome \,lo

-ow- and moderate incometousing

rPTC 34.051 fax-foreclosed land limitationPrinrarily Low-rnd Mod- income

A purpose consistent withCity urban redevelopment oraffordable housins Dlan

nterlocal agreementlmong taxing entities;and must beracant/distressed & tax-ielinouent 6+ vears

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period, of its inventory of parcels of real property acquired through the Program. The CityManager or his/her designee may grant up to one (1) one-year extension of thedevelopment agreement due to delays related to installation or improvement ofinfrastructure or zoning/platting issues. Any additional extensions of the developmentagreement must be approved by City Council.

Staff may impose additional eligibility criteria that are consistent with this Program, state statuteand city ordinance. lf land is sold pursuant to Dallas City Code Section 2-26.4, developer mustcomply with the eligibility criteria set forth in the ordinance.

Project Eligibility CriteriaTo be eligible to purchase real property pursuant to the Land Transfer Program, the proposedproject must meet all the following criteria, unless the land is sold pursuant to Dallas City CodeSection 2-26.4:

Parcels of real property must be developed with: (1) a housing unit or units that are offeredfor sale, lease or lease-purchase, or (2) a commercial use that will complement the City'sComprehensive Housing Policy, economic development policy, or redevelopment policy.

Housing units developed on the parcels of real property may only be sold, leased, oroffered as a lease-purchase to households whose incomes are within the income bandsprioritized by the adopted Comprehensive Housing Policy.Housing units developed on the parcels of real property may be either a single family,duplex, or multi-family housing use.

Staff may impose additional eligibility criteria that are consistent with this Program, state statuteand city ordinance. lf land is sold pursuant to Dallas City Code Section 2-26.4, the project mustcomply with the eligibility criteria set forth in the ordinance.

ldentification of Eligible Households, Affirmative Fair Housing Marketing and Other PoliciesDevelopers of for-sale housing units must comply with all the terms of the Mixed lncome HousingProgram as set forth in Chapter 20A of the Dallas City Code, as amended, if applicable.Developers of for-sale housing units may only sell to homebuyers who meet the eligibility criteriaset forth in the City of Dallas Homebuyer Assistance Program (DHAP), or a successor program.

Developers of rental housing or lease-purchase units must comply with all the terms of the Mixedlncome Housing Program as set forth in Chapter 20A of the Dallas City Code, as amended, ifapplicable. Such exemptions will be clearly set forth in the development agreement.

Sales Price of Parcels of Real Property Sold via the Land Transfer ProgramCity-owned real property: Properties will be initially offered at fair market value ("FMV"), asdetermined by a comparative market analysis. A discount will be available if project underwritingindicates that the discount is needed either to ensure the viable sale, lease or lease-purchase toan income-qualified buyer or the viable development of a commercial use. The discount is subjectto City Council approval.

Tax-foreclosed real property: A fixed price of $1,000 for up to 7,500 square feet of land purchasedunder a single proposal, plus $0.133 for each additional square foot of land purchased under theproposal. lf land is sold pursuant to Dallas City Code Section 2-26.4, the sales price set forth inthe ordinance applies.

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Sales Price of For-Sale Housing Units Developed via the Land Transfer ProgramFor-sale units produced under the Land Transfer Program must be sold at the fair market valueas determined by an "as-completed" or "subject to completion" appraisal completed by anindependent state-licensed appraiser. However, the terms of the development agreement foreach parcel of real property purchased pursuant to the Program will include any seller-discountthat must be provided to the eligible purchaser so that the amount paid by the eligible purchaseris affordable based on their income.

Rental Rates for Rental Housing Units Developed via the Land Transfer ProgramRental units produced under the Land Transfer Program must be leased at affordable rental ratesin accordance with the approved development agreement and Chapter 20A of the Dallas CityCode, as amended. lf land is sold pursuant to Dallas City Code Section 2-26.4, the rental ratesset forth in the ordinance applies.

Term of AffordabilityThe term of affordability for for-sale housing units is 5 years from the filing date of the deedtransferring the unit from developer to homebuyer.

The term of affordability for rental units and commercial uses is 20 years from the date that thefirst unit is occupied by an eligible tenant.

The term of affordability for lease-purchase units will be negotiated on a case-by-case basis inaccordance with the goals of this Program.

lf land is sold pursuant to Dallas City Code Section 2-26.4, the term of affordability set forth in theordinance applies.

Deed Restrictions and Right of ReverterThe City will impose restrictive covenants on all parcels of real propefi its sells pursuant to theLand Transfer Program. lf land is sold pursuant to Dallas City Code Section 2-26.4, the deedrestrictions and right of reverter requirements set forth in the ordinance applies.

The restrictive covenants will require the parcels of real property to be developed and maintainedin accordance with the development agreement and all applicable city, state and federal laws.These restrictions will include that housing units developed on the parcels of real property beoffered for sale, lease or lease-purchase to low- and moderate-income households and beoccupied by low- and/or moderate-income households for the entire term of the affordabilityperiod.

Land acquired by a developer pursuant to the Land Transfer Program may revert to the City if theCity Manager or his/her designee determines that the developer has:

failed to take possession of the land within 90 calendar days after receiving the deed tothe parcels of real property;failed to complete construction of all required housing units or other required developmenton the real property, or failed to ensure occupancy by eligible households within thedevelopment timeframe set forth in the development agreement;incurred a lien on the property because of violations of city ordinances and failed to fullypay off the lien within '180 days of the City's recording of the lien; orsold, conveyed, or transferred the land without the consent of the City.

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Upon determination by the City Manager or his/her designee that a condition described abovehas occurred, the City Manager or his/her designee is authorized to execute an instrument,approved as to form by the City Attorney, exercising against the parcel of real property the City'spossibility of reverter with right to reentry. The City Manager or his/her designee shall file noticeof the reverter and reentry of the land by the City in the real property records of the county inwhich the parcel of real property is located, which notice must specify the reason for the reverterand reentry. The City Manager or his/her designee shall provide a copy of the notice to thedeveloper in person or by mailing the notice to the developer's post office address as shown onthe tax rolls of the City or of the county in which the land is located.

Release of Non-Tax Liens, Release of Restrictive Covenants and Right of RevefterPursuant to this Program and contingent upon City Council approval, and in consideration fordeveloper agreeing to construct affordable housing units or other approved uses on parcel(s) ofreal property, the City Manager or his/her designee is authorized to execute instruments,approved as to form by the City Attorney, releasing any non-tax City liens that may have beenfiled by the City during the City's ownership of the parcel(s) of real property.

Additionally, the City Manager or his/her designee is authorized to execute instruments, approvedas to form by the City Attorney, releasing the City's possibility of reverter with right of reentry andterminating the restrictive covenants on the land upon compliance with all terms and conditionsof the development agreement and this Program.

Tvpe of Transfer

The City will transfer all City-owned parcels and resell all tax-foreclosed parcels via a deed withoutwarranty, approved as to form by the City Attorney.

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191864PRESERVING AFFORDABILITY

Title Glearing and Clouded Title Prevention ProgramAmended September 25,2019 by Resolution No. 19-1498

The Title Clearing and Clouded Title Prevention Program (Program) is a legal and professionalservices program administered by a third-party entity or entities that is designed to focus oneffectively and efficiently utilizing a universal representation model to assist qualified clients of thethird-party entity (hereinafter referred to as "clients") to clarify the legal ownership of their realproperty so that homeowners can apply for funding for home repair and other needs and canprevent future heirship issues; and clients with vacant land can sell or build on their land. Asecondary focus is to provide associated services, including legal rights information sessions,prevention services, and program evaluation and measurement.

While clarifying ownership (technically, creating a "marketable title") in preparation for eventualsale of a home is a potential outcome, the focus of the Program is on providing legalservices thatenhance neighborhood stability and enable homeowners to become eligible for funding to investin their homes. For this reason, eligible legal services include legal rights information sessionsand mitigation.

Additionally, on May 22, 2Q19, by City Council Resolution No. 19-0804, the City passed aresolution to promote equity and committed to make every effort possible to commit moreresources to areas and populations where data demonstrates the needs are greatest. ln keepingwith this resolution, the Program focuses on specific geographical areas of the City where theProgram is likely to jumpstart or support neighborhood stabilization, including neighborhoods withhigh amounts of vacancy, code violations, and historic properties.

The Program addresses the three broad goals of the comprehensive housing policy: to maintainaffordable housing, to provide greater fair housing choices, and to overcome patterns ofsegregation and concentrations of poverty.

AdministrationThe Program is administered by the Department of Housing and Neighborhood Revitalization, ora successor department.

Award of FundingA request for proposals, or a similar competitive application process, will be used to award fundingunder the Program when such funding is available, and any such award will be subject to CityCouncil approval.

Eligible Clients and Prioritization of ClientsEligible clients are families and individuals with an assumed or possible ownership interest in realestate in eligible geographic areas and who have a household income that is less than or equallo 12O"/" of the Dallas Area Median Family lncome, as published by HUD annually, and who areunrepresented by counsel related to title to real property.

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191854Within the eligible geographic areas as further described below, preference will be given topotential clients who have an assumed ownership interest in:

o a home in MVA categories G, H, and I

. real estate in City of Dallas-designated historic districtso real estate in designated Reinvestment Areas.

Preference will also be given to those clients within the eligible geographic areas who have beendenied City of Dallas Housing and Neighborhood Revitalization (the "Department") funding forlack of ownership clarity on the title.

Clients with title issues on vacant land, as well as those who are in debt to the City and/or whoare involved in a suit against the City, are eligible for this Program, subject to the eligibilityrequirements detailed herein.

Eligible Geographic AreasAreas of southern Dallas (south of the Trinity River west of downtown and south of l-30 east ofdowntown) in Market Value Analysis Categories D, E, F, G, H, and I are eligible for the Program.Uncategorized parcels directly adjacent to a parcel or parcels in one of these categories are alsoeligible.

Eligible Services and Costso Remove ownership clouds on the titles of eligible parcels - Screen clients and

successfully clarify ownership (or make title "marketable") for a significant number of titlesin eligible geographic areas. Eligible activities include, but are not limited to, client intakeand screening, legal advice, document preparation and filing, title examination andabstract services, and legal representation in court.

o Community legal rights information sessions - Conduct legal rights information sessions,including providing information about potential responsibilities and associated futuredecisions related to having marketable title, and potentialfinancial impacts of keeping orselling the property.

. Conduct client intake - Screen clients and employ a direct representation model.o Prevention - Provide legal services to eligible clients to increase the number of families

with wills, transfer on death deeds, and/or related documentation necessary to ensure asmooth transition of ownership of the property. As needed, provide guidance on thepotential financial impacts to the client of keeping or selling the property.

o Measurement - Maintain applicant and client data and report aggregate, non-identifyingdata to the Department on a quarterly and final basis as detailed in the contract. Reporteddata should include quantitative data such as number of informational events, legalscreenings conducted, titles with ownership clouds removed, wills or transfer on deathdocuments, cases referred, and estimates on the potential depth and scope of theinstance of cloudy title. Reported data should also include a qualitative evaluation ofefforts and recommendations for improved performance for a potential future programand shall include any other information requested by the City.

lneligible Services and CostsThis program is not intended to remove any liens, and payment of liens is not an eligible expense.

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Community Land Trust ProgramApproved December 11, 2019

This Community Land Trust Program (Program) identifies Community Land Trust (CLT) eligibilityand operation criteria under which the City Council may initially designate and revoke the re-designation of a CLT, and under which the City Manager, or their designee, may renew orrecommend City Council revocation of the designation of CLTs in the City of Dallas.

A CLT in general is an organization that is created to acquire and hold land for the benefit ofdeveloping and preserving long-term affordable housing by separating the cost of land ownershipfrom the cost of home ownership with a 99-year ground lease and home resale formula. Thehomeowner may build equity at a pre-negotiated maximum rate (resale formula) over the tenureof the ground lease and be eligible for a property tax reduction based on the deed restriction,assuming housing market appreciation. The resale formula is the amount a person may sell theirhome for at any given point. The application process will establish all applicable guidelines inaccordance with those described herein. A CLT accomplishes its purposes by separating the costof land ownership from the cost of home ownership. Specifically, a CLT retains long-termownership of land, while either selling or leasing the residential structure built or existing on theCLT-owned land in order to create or maintain affordable housing.

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in theThe purpose of a CLT is to:

o provide affordable housing for low-income and moderate-income residentscommunity;

o promote resident ownership of housing;. keep housing affordable for future residents; and. capture the value of public investment for long-term community benefit.

ln addition to the statutory eligibility criteria, a CLT organization seeking to be designated or re-designated by the City of Dallas as a CLT must meet the Eligibility and Operation Criteria setforth is this policy.

Consistency with City's Affordable Housing GoalsThe operation of CLTs shall align with the Comprehensive Housing Policy. This CLT Program isdesigned to work in conjunction with other City programs, and the City's existing affordablehousing production goals. On an annual basis, the Department shall report to the City Council theyear-to-date production data for the program.

Consistency with Fair Housing LawsOn an annual basis, the Program will be reviewed by the Office of Equity and Human Rights, orits successor department, to ensure that the Program is being operated in a manner that isconsistent with fair housing laws, The City will collect and maintain data regarding the location ofparcels of real property in CLTs. ln addition, the City will collect program evaluation data anddemographic information regarding the eligible households who occupy housing units in CLTs.

Application ProcessPrior to submitting a written application, the CLT must attend a CLT information session facilitatedby the Department and receive information about the Program, designation process, and re-designation process.

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The City Manager, or their designee, is authorized to create and periodically update anapplication.

Eligibility Criterialn its application to the City of Dallas, a non-profit CLT organization must demonstrate that theorganization:

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has been created to acquire and hold land for the benefit of developing and preservinglong-term affordable housing in the City of Dallas;must be exempt from federal income taxation under Section 501(a), lnternal RevenueCode of 1986, by being certified as an exempt organization under Section 501(c)(3) ofthat code;has adopted articles of incorporation, or a similar governing document, stating that it hasthe purpose to acquire and hold land for the benefit of developing and preserving long-term affordable housing in the City of Dallas, as required by Chapter 3738, as amended;currently owns or intends to own land for the purpose of leasing the land and selling orleasing the housing units located on the land as provided by Chapter 3738, as amended;has adopted articles of incorporation, or a similar governing document, stating that ondiscontinuance of the organization by dissolution or otheruvise that the assets related toits CLT activities be transferred to the City of Dallas, the State of Texas, the UnitedStates, or an organization that is qualified as a charitable organization under Section501 (c)(3), lnternal Revenue Code of 1986 and designated as a CLT by the City of Dallas;andis not controlled by, nor receives direction from, a for-profit entity or corporation.

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Operation Criterialn its application to the City of Dallas, a non-profit CLT organization must demonstrate that theorganization:

defines its geographical boundaries of operation. A CLT may operate citywide or mayelect to focus on a specific geographic area or areas.maintains at least 1/3 representation on the organization's governing board for low-income community residents and, to the extent practicable, low-income beneficiaries ofthe CLT properties with regard to decisions on the design, siting, development, andmanagement of affordable housing;must use standard documents, including but not limited to a ground lease and deedrestrictions;

o that include a resale formula outlining the amount of equity per year that can bebuilt while ensuring long term affordability;

o that ensures that the owners of housing units built on CLT land will either be eligiblefor a property tax discount based on the deed restriction or, where the occupant isa tenant, that the occupant will benefit from any property tax discount;

o that have terms for sale, lease and inheritance,must sell or lease housing units only to eligible households as set forth in Chapter3738.006, as amended;may not discriminate on the basis of source of income with tenants. This non-discrimination provision provides housing opportunities for households with rentalassistance or vouchers, as applicable;

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will consider the local neighborhood context for architecture that is respectful and withincharacter of existing style and context, so that if a neighborhood plan exists with DesignGuidelines, they will be followed by the organization;has a business plan that ensures the CLT will have the financial capacity to perform itsoperations including supporting ongoing maintenance of all property improvementexteriors and grounds;has at least two years of experience developing and managing affordable housing or hascontracted with an organization that has such experience and that will providemanagement services or technical expertise untilthe non-profit independently meets theexperience requirements;maintains paid staff, or has contracted with an organization that has staff, who havesuccessfully developed and/or maintained affordable housing projects;annually has a financial audit or audit review prepared by an independent auditor. Theaudit must include a detailed written report describing the CLT's sources and uses offunds, including an A-133 analysis of compliance with federal grants, if applicable; ananalysis of internal controls; and the auditor's opinion letter to the board of directors andmanagement; andcomplies with any other requirements imposed by the City Manager, or their designeethat are in accordance with the Program and the City's Comprehensive Housing Policy.

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Re-DesignationTo maintain designation as a CLT in subsequent years after initial designation, a CLT mustsubmit a yearly re-designation application to the Department. The City Manager, or theirdesignee may re-designate the CLT or recommend to the City Council to remove the CLTdesignation. The CLT must:

o meet the Eligibility and Operation Criteria set lorth is this policy;. certifv that the information in the CLT's initial application is still true and correct and that

the CLT continues to comply with all local, state and federal regulations OR acknowledgethat information in the CLT's initial application has changed and attach updatedinformation;

r submit its annual audit or audit review;. submit all required evaluation and reporting metrics; ando submit additional information as required by the Department.

Program EvaluationDuring initial application and upon re-application, each CLT must submit the following informationthat will assist the Department in evaluating the impact of all CLTs operating in the City of Dallas:

. Origin statement (how was this CLT organizedllormed and why)o For re-designation - add any changes to format or structure of the organization;

o Definition of "Community" in the Community Land Trust;. lf geographically based within an area, the geographic boundaries;o Number of units placed in CLT annually since inception;. Number of units anticipated to be placed in the CLT annually over the next three years;. Number of families served since inception;. AMFI of families in homes on ClT-owned land at time of sale or transfer;r Demographic data on family, household size, racelethnicity, etc.;o Total acreage of property in CLT designated by land use type (single family, commercial,

multifamily, etc.);

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Market Value Assessment (MVA) category or other document that shows market realitiesand how ground lease responds to market conditions; andList of services provided to families through CLT such as: maintenance program, legalservices, financial education, emergency home repair, etc.Upon request, City Staff are eligible to assist in assessing fiscal impact by annually, afterthe certified tax roll is released, report for each owned CLT property three items: 1) thetaxable value and the municipal real property tax amount due during the year the CLTpurchased the property, 2) the taxable value for the land and improvements and the realproperty municipal tax revenue due for the current tax year, and 3) an estimate of themarket value of the land and improvements but for the CLT and a corresponding estimateof the municipal real property tax that would have been due based on current appraisedvalues of similafly situated comparable properties.

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FUNDING AND SUPPORTING ACTIONS

Federal Funding Sources

The City receives financial support from the U.S. Department of Housing and Urban Development(HUD) to assist low and moderate-income families in obtaining affordable housing. The Cityreceives several Entitlement (HUD) grants, which it can use to support its housing initiatives. HUDoutlines certain regulations that apply when using grant funds. This policy document uses theHUD regulations as a basis and incorporates the City's own policies as adopted by City Council.

Community Development Block Grant (CDBG)The Community Development Block Grant has been in existence since 1974. The primaryobjective of the CDBG program is to improve communities by providing decent housing, providinga suitable living environment, and expanding economic opportunities. The primary beneficiary ofCDBG funds must benefit low to moderate-income persons; aid in the prevention or eliminationof slums or blight; or meet an urgent need.

HOME lnvestment Partnership Program (HOME)The HOME Investment Partnership Program has been in existence since 1990. The goals of theHOME program are to provide decent affordable housing to lower-income households, expandthe capacity of nonprofit housing providers, strengthen the ability of state and local governmentsto provide housing, and leverage private sector participation. HOME funds may be utilized forrental activities, homebuyer activities, and homeowner rehabilitation activities. All HOME fundsmust benefit persons of low and moderate income.

HOME Match RequirementAll housing development projects must meet a twenty-five (25%) HOME matching requirement ofcontributions made from non-federal resources and may be in the form of one or more of thefollowing:

. Cash contributions from nonfederal sourceso Forbearance of feeso Donated real propertyo Cost, not paid with federal resources, of on-site and off-site infrastructure that the

participating jurisdiction documents are directly required for HOME-assisted projectsr Proceeds from multifamily affordable housing project bond financingo Reasonable value of donated site-preparation and construction materials, not acquired

with federal resourceso Reasonable rental value of the donated use of site preparation or construction equipment. Value of donated or voluntary labor or professional services in connection with the

provision of affordable housing

Neighborhood Stabilization Program (NSP)The Neighborhood Stabilization Program was authorized under Division B, Title lll of the Housingand Economic Recovery Act of 2008 (HERA) to help communities recover from the effects offoreclosures, abandoned properties, and declining property values. The City collects programincome from this source and appropriates it on an annual basis.

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State and Local Funding Sources

General Obligation BondsGeneral Obligation Bonds were authorized under the 2017 bond package to help withinfrastructure, economic development and housing, and related expenses as authorized by law.Economic Development and Housing have been allocated approximately $SS million for the nextfive (5) years.

Tax Exempt Bond Financing (City of Dallas Housing Finance Corporation)The City of Dallas Housing Finance Corporation (DHFC) was organized in 1984 in accordancewith Chapter 394 of the Texas Local Government Code (Code). Under the Code, the purpose ofthe DHFC is to assist persons of low and moderate income to acquire and own decent, safe,sanitary, and affordable housing. To fulfill this purpose, the DHFC can be an issuer of tax exemptbonds. The DHFC may issue bonds to finance, in whole or in part, the development costs of aresidential development or redevelopment; the costs of purchasing or funding the making of homemortgages; and any other costs associated with the provision of decent, safe, and sanitaryhousing and non-housing facilities that are an integral part of or are functionally related to anaffordable housing development.

Affordable Housing Partnerships: The DHFC can also partner with affordable housing developersfor the production of multifamily housing. The DHFC can acquire an ownership stake in thedevelopment by becoming the General Partner (GP) of an ownership entity, right of refusal topurchase the improvements, and owning and controlling the land. DHFC is the sole member ofthe GP. Fifty-one percent of the units must be set aside for affordable housing. lf all of theaforementioned criteria are met; then the development can benefit from a tax exemption.Additionally, the DHFC can be the General Contractor to allow for sales tax exemption onconstruction materials.

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City of Dallas Policy for Supporting Housing Developments Seeking Housing TaxCredits(Amended June 12, 2019)

The City of Dallas ("City") has developed the following policy to outline its approach regardingrequests from developers of projects seeking Housing Tax Credits ("HTC") from the TexasDepartment of Housing and Community Affairs ('TDHCA') for Resolutions of No Objection(sometimes referred to as "No Objection") or Resolutions of Support (sometimes referred to as"Support") from the City.

Background on Housing Tax Credits in Texasln 1 986, Congress, through the Tax Reform Act, enacted Section 42 of the lnternal Revenue Code("Section 42"). Section 42 created Low lncome Housing Tax Credits that may be awarded toowners of multi-family rental housing that meet certain income and rent restrictions and otherprogram requirements. At the Federal level, the HTC program has very few requirements butdoes require that states designate an agency to administer the HTC program and develop aQualified Allocation Plan ("QAP") outlining how HTC will be allocated and administered. ForTexas, the Texas Department of Housing and Community Affairs has been designated as thatagency, and the QAP is updated annually.

There are two forms of the HTC: 9% HTC and 4%HTC.

9% HTC are considered to be "competitive." The State receives a per capita allocation of HTC toaward each year, and applications are scored and are awarded by TDHCA only once per year.4"/" HTC, on the other hand, are "automatically" awarded to projects using eligible tax-exemptdebt. As a result, 4"/" HfC are considered to be "non-competitive" since applications are notcompetitively scored and are awarded by TDHCA multiple times throughout the year.

Under the 9% HTC, a Proposer may receive points for local government support. To receivepoints, the application must include a Resolution of Support or No Objection from the governingbody of the municipality in which the proposed development site is to be located.

Although 4o/o HTC applications are not competitively scored, the Proposer must obtain aResolution of No Objection from the governing body of the municipality in which the proposeddevelopment site is to be located. This is a threshold requiremenl lor 4o/o credit awards.Applications that do not include a Resolution of No Objection cannot proceed.

OverviewThis HTC policy seeks support the broad goals of the Comprehensive Housing Policy to do thefollowing:

. Create and maintain affordable housing throughout Dallas,o Promote greater fair housing choices, and. Overcome patterns of segregation and concentrations of poverty through incentives and

requirements.

The decision to provide a Resolution of No Objection or Support must be aligned with these goals.Unlike other City programs that directly invest in specific projects or provide direct incentives,such as fee waivers or tax abatements, the resolutions are an indirect way for the City to supportthe proposed development. Because of the points allocation for a Resolution of No Objection orSupport lor 97" HTC and the threshold requirement of a Resolution of No Objection for 4"hHTC,

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the City's position regarding a proposed development can greatly affect whether the proposeddevelopment is awarded HTC by TDHCA.

Given the substantial need for affordable housing across the City and that TDHCA administersthe process for awarding HTC, the City has an interest in broadly supporting quality andresponsible HTC proposals across the City. As such, the City will be supportive of maximizingproduction using HTC.

Definitions;o Affordability Period has the same meaning as the term is defined in the Qualified

Allocation Plan, as amended.. Development has the same meaning as the term is defined in the Qualified Allocation

Plan, as amended.. Development Site has the same meaning as the term is defined in the Qualified Allocation

Plan, as amended.o Historically Underutilized Business has the same meaning as the term is defined in the

Qualified Allocation Plan, as amended.o Market Analysis has the same meaning as the term is defined in the Qualified Allocation

Plan, as amended.o Market Rate Housing Units means units for which the rent may by adjusted by the

Owner, as defined in the Qualified Allocation Plan, as amended, subject only to the termsof the lease. Housing units are not considered Market Rate Housing Units if the rent thatmay be charged and/or the tenant(s) who may occupy the units are limited by a: (1) a LandUse Restrictive Agreement (LURA) or other restrictive covenants, or (2) any othercontractual agreement.

o Plan and Cost Review means an analysis, usually conducted by a third-party consultanton behalf of a lender prior to approval of a construction loan or of construction-relatedinformation and documents that is intended to evaluate whether costs are appropriate, theconstruction plan is well-designed and there are appropriate allowances for contingencies.

o Proposer means the Proposer, Developer, Development Owner, Development Team,and Owner as those terms are defined in the Qualified Allocation Plan, as amended.

o Qualified Non-Profit Organization has the same meaning as the term is defined in theQualified Allocation Plan, as amended.

o Registered Neighborhood Organizations means an organization that has registeredwith and provided its boundaries to the City of Dallas Department of Planning and UrbanDesign.

CalendarProposers may submit a proposal in response to this policy regarding HTC at any time during theyear. However, City staff will only review applications and schedule proposals for City Councilconsideration four times per year. This calendar will be updated and published annually to alignwith the TDHCA timeline by the City Manager or his/her designee.

Review & Recommendation Process. City staff will review all applications. For bolh 4"/o and g% HTC applications, City staff will

recommend a Resolution of No Objection to City Council if City staff has determined, inits sole discretion, that the threshold requirements, as outlined below, have been met.

o For 9% HTC applications that have met the threshold requirements, as outlined below,and address Priority Housing Needs Developments, as described below, City staff may

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191864designate these applications as "Priority Housing Needs Developments" and willrecommend a Resolution of Support and a $500.00 funding commitment to City Council ifCity staff has determined, in its sole discretion, that the threshold requirements and PriorityHousing Needs Developments criteria have been met.

. For 9% HTC applications that have met the threshold requirements, as outlined below,and obtain a minimum score of 50 points under the Scoring Factors for Other 9% HTCApplications section, and do not qualify as a "Priority Housing Needs Development", Citystaff will recommend a Resolution of Support and a $500.00 funding commitment to CityCouncil if City staff determines, in its sole discretion, that the threshold requirements havebeen met and that the application has scored at least 50 points.

4"h and 9% HTC Applications Threshold Requirements

Applicable to All Applicationso Submission of a complete application to the CiW;o The Proposer must have site control (e.9. purchase option);o lf not currently zoned for the intended use, the Proposer must have completed a formal

consultation with City Planning staff outlining the process and requirements for rezoningthe site;

o The Development must meet TDHCA minimum site and development requirements. lfundesirable site features exist, the Proposer must submit a mitigation plan that sufficientlymitigates undesirable site features and supports site eligibility pursuant to TDHCAstandards;

. The Development must meet TDHCA undenryriting standards;o The Development must contribute to the City's obligations to affirmatively further fair

housing;o The Proposer must notify existing tenants living at the Development Site at least 45 days

prior to submitting the proposal;o For any Development that is occupied by existing tenants that is not othenruise subject to

the Uniform Relocation Act (URA), the development proposal must include a City-approved relocation plan that:

o Minimizes permanent displacement from the Development. ln the event ofpermanent displacement, Proposers will be required to provide compensation toaffected tenants that is otherwise in alignment with URA requirements;

o Must provide reasonable notice to affected tenants prior to any temporaryrelocation and covers all reasonable out of pocket costs incurred by tenants as aresult of moving from one unit to another within the Development or temporarilyvacating their units to allow rehabilitation work to proceed; and

o Proposer must meet all applicable state, federal, or local laws relating todisplacement of tenants.

o For any Development involving rehabilitation or adaptive reuse (i.e. conversion of spaceoriginally designed and built for other than residential purposes), the Proposer must submita Plan and Cost Review for the Development including all supporting documentation thatformed the basis of the review;

o For any Development located in a census tract with a poverty rate of 40o/o $ higher, theDevelopment must achieve a minimum score under Resident Services element of thescoring factors below of:

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a

o 17 points for elderly developments;o 23 points for family developments; oro 22 points for permanent supportive housing developments; and

The Proposer must be eligible pursuant to TDHCA standards and City standards:o A proposer is not eligible for any resolution if the Proposer i) is in debt to the City

or delinquent in any payment owed to the City, in accordance with Dallas City CodeSection 2-36, as amended; ii) is currently in litigation with the City, either as adefendant or plaintiff; or iii) within the last 10 years has been found liable ofviolating Chapter 20A (Fair Housing) or Chapter 46 (Human Rights and SexualOrientation) of the Dallas City Code.

Developments lnvolving Rehabilitation of Existinq Housinq

. The proposed scope of work must be informed by a capital needs assessment (CNA),prepared by a qualified third-party professional that is independent from theDevelopment's architect or engineer, builder/general contractor, or other member of theDevelopment Team. The City will review the CNA and conduct a site visit. The CNA mustdemonstrate to the City's satisfaction that the initial scope of work is sufficient to addressall City code violations (whether formally cited or not). Further, the scope of work,combined with planned replacement reserve funding, must be determined sufficient toaddress all projected repairs or replacements of the following items through the entire termof the Development's affordability period:

o All major systems including roof, foundation, electrical, HVAC, and plumbing;o lnterior and exterior windows and doors;o The interiors of all units including the kitchen and bathroom and all major

appliances;o The exterior of the development, including balconies, walkways, railings, and

stairs;o Communal facilities such as community rooms, fitness centers, business centers,

etc.; ando Security features including gates and security cameras.o Accessibility

Priority Housing Needs Developments (applicable to onty 9% HTC Applications)A9% HTC application that meets any of the following criteria may be designated by City staff asa "Priority Housing Needs Development" and recommended for a Resolution of Support and$500.00 funding commitment to City Council, if City staff has determined, in its sole discretion,that the threshold requirements and Priority Housing Needs Developments criteria have beenmet:

o The development proposal has been selected within the past three years to receive Cityfunding (including federal funds such as HOME, CDBG, etc. or local funding such asGeneral Obligation Bond funding) under a competitive application process administeredby the Department of Housing and Neighborhood Revitalization and otherwise remains incompliance with all funding requirements;

r The proposal includes participation by the Dallas Housing Finance Corporation or City ofDallas Public Facilities Corporation applicable to housing (if created). Such participationmust include ownership of the underlying development site by the entity and/or stake inthe ownership structure of the development;

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. The proposal involves the redevelopment of public housing owned by the Dallas HousingAuthority under the Choice Neighborhoods, Rental Assistance Demonstration, HOPE Vl,or other similar HUD programs that may be created;

o The development proposal is located in a census tract with a poverty rate below 20%;o The development proposal is within any area designated as a Redevelopment

Reinvestment Strategy Area (RSA) or a Stabilization RSA in this Comprehensive HousingPolicy; or

o Developments with at least 50 units for which the Owner must enter into an MOU with thelead entity of the Continuum of Care by which the project will prioritize at least 20"/" olunits.for tenants referred from the Continuum of Care Housing Priority List.

Scoring Factors for Other 9% HTC ApplicationsFor 9o/" HTC Applications that do not qualify as a Priority Housing Needs Development, theapplication must achieve a minimum score of 50 within this section, Scoring Factors for Other9% HTC Applications, to be recommended by City staff for a Resolution of Support and $500.00funding commitment to City Council, if City staff has determined, in its sole discretion, that thethreshold requirements have been met and the application scores a minimum of 50 points underthis section.Mixed-lncome Projects (Maximum of 20 points)Proposals including market rate units (i.e. those without income/rent restrictions) as follows:

Qualified Nonprofit or Historically Underutilized Business on DevelopmentTeam (5 points)To receive these points, the development team must include a Qualified Nonprofit Organizationor Historically Underutilized Business ("HUB") that has a controlling interest in the development.lf ownership is a limited partnership, the Qualified Nonprofit Organization/HUB must be theManaging General Partner with greater than 50% ownership in the General Partner. lf ownershipis a limited liability company, the Qualified Nonprofit Organization/HUB must be the controllingManaging Member with greater than 50% ownership in the Managing member. Additionally, theQualified Nonprofit Organization/HUB or its affiliate or subsidiary must be the developer or acodeveloper of the Development.

At least 5% but less than 10% market rate units 5

At least 10% but less than 15% market rate units 10

At least 15% but less than 2Q"/o market rate units 15

At least 2Oo/o market rate units 20

t I:t-f,IIF

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High Frequency Transit 5 3 1

Public Park 5 3 1

Full Scale Grocery Store 5 3 1

OommunityiSenior Center or Library 5 3 1

[icensed Day Care 5 3 1

Qualifying Medical Clinic or Hospital 5 2 1

ransit time to Em nt 5 2 0

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Proximity of Amenities to Development Site (Maximum of 25 points)The fol matrix shall be used in scorin the Deve nt under this

Resident Seruices (Maximum of 25 points)Note: The list of potential resident seruices is derived from, but not identical to, the QAP, asamended. The seruices outlined in the table below are shorthand descriptions, but the City willuse the same definitions and requirements for each seruice as outlined in the QAP, as amended.For purposes of this section, however, the City will use its own scoring criteria to award points. Insome cases, the points available may vary from those awarded under the QAP, as amended.Additionally, the total points available are not capped in the City's scoring rubric in the samemanner as they are for the QAP, as amended. City Manager or designee may amend the seruicedescriptions categories and point allocations on an annual basis based on the annually updatedQAP. The maximum points allocated to Resident Seruices will remain the same (25 points).

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Transportation ServicesMin. 3x/week shuttle to grocery/pharmacy or big-box retail; ORdaily shuttle during school year to nearby schools not served byschool bus system

(AXi) 3.5

Month ly transportation to com m u n ity/social events (AXii) 1

Children ServicesHigh quality PreK proqram with dedicated space on-site (BXi) 4Min. 12 hours/week organized on-site K-12 programming (e.gtutorinq, after school and summer care, etc.)

(B) (i i) 3.5

Adult ServicesMin. 4 hours/week organized onsite classes for adults (e.9.GED, ESL, financial literacv, etc.)

(cxi) 3.5

Annual income tax preparation (cxii) 1

Contracted career training and placement partnerships withlocal emplovers

(cxiii) 2

Weekly substance abuse meetinqs at proiect site (CXiv) 1

Health ServicesFood pantry accessible to residents (on site or via on-requesttransportation)

(DXi) 2

Annual health fair (DXii) 1

Weekly exercise classes (DXiii) 2Contracted on-site occupational or physical therapy for elderlyor disabled tenants

(DXiv) 2

Communitv ServicesPartnership with local law enforcement to provide quarterlyactivities with tenants

(EXi) 2

Notary services for tenants (EXii) 1

Min 2Vmonth arts, crafts, or other recreational activities (e.gbook club)

(E) (iii) 1

Min 2xlmonth on-site social events (e.9. potlucks, holidaycelebrations, etc.)

(E)(iv) 1

Case management for elderly, disabled, or special needstenants

(EXv) 3

Weekly home chore and quarterly preventative maintenance forelderly or disabled tenants

(EXvi) 2

Social Security Act Title lV-A programminq (B(vii) 1

Part-time resident services coordinator (min. 15 hours/week) orcontract for same through local provider

(EXviii) 2

Education/tuition savings match or scholarship program forresidents

(EXix) 2

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Community Housing Development Organizations (CHDOS)

A CHDO is defined under 24 Code of Federal Regulations (CFR) Part 92.2 as a nonprofitorganization (501@3 or 4) organized under state law; has no part of its net earnings inuring to thebenefit of any member, founder, contributor, or individual; is neither controlled by nor under thedirection of individuals seeking to derive profit or gain from the organization. While a CHDO maybe sponsored or created by a for-profit entity whose primary purpose is not the development ormanagement of housing, such as a builder, developer or real estate management firm, the for-profit entity may not have the right to appoint more than one-third of the membership of theorganization's governing body and the board members appointed by the for-profit entity may notappoint the remaining board members. A CHDO does not include a public body although a locallychartered organization may qualify under certain conditions.

The CHDO must be free to contract for goods and services from vendors of its own choosing.The CHDO must comply with certain financial accountability standards as described in lhe 24CFR 84.21 Standards for Financial Management Systems. Among the primary purposes of theCHDO's organization, as outlined in their organizational charter, articles of incorporation,resolutions or bylaws must be the provision of decent housing that is affordable to low-to-moderate income persons. A CHDO must remain accountable to the low-income communityresidents by: 1) maintaining at least one-third of its governing board's membership for residentsof low-income neighborhoods, other low-income community residents, or elected representativeof a low-income neighborhood organization; 2) providing a formal process for low-income programbeneficiaries to advise the organization in its decisions regarding the design, site selection,development and management of affordable housing.

A service area in urban areas such as Dallas, "community" may be defined as a neighborhood,or neighborhoods, city, county or metropolitan area. Additionally, CHDOs are subject to theaffirmatively furthering fair housing rules which state that housing should not be located in areasof minority concentration or with high poverty rates. Historically, Dallas CHDOs have elected towork in areas where disinvestment has occurred, and where high concentrations of poverty exist.CHDOs should grow and develop the capacity to partner with for-profit developers to producemarket rate housing in areas of disinvestment. Furthermore, CHDOs should work in areas withlow poverty rates, have access to a quality education, transportation, and jobs. These highopportunity areas lack quality affordable housing options.

A CHDO must demonstrate the capacity to carry out the activities assisted with HOME lnvestmentPartnership Program (HOME) funds within 12 months of the project commitment. CHDO's maysatisfy the HOME requirement by hiring experienced key staff members who have successfullycompleted similar projects or a consultant with the same type of qualified experience and a planto train appropriate key staff member of the organizations. CHDO's must demonstrate a minimumof one-year experience in seruing the community in which the assisted housing will be locatedbefore funds can be reserved for the organization. This requirement can be satisfied by a parentorganization in some cases if a CHDO is formed by a group of local churches or local serviceorganizations. CHDOs must be certified by the City of Dallas to be awarded CHDO set-asidefunds for the development of housing and operating assistance.

Set AsideHUD requires that 15"/" of the HOME allocation each year be made available to CommunityHousing Development Organizations (CHDOS) for the development of affordable homebuyer orrental housing.

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Operatingln addition, the City can allocate up to 5"/" of the HOME allocation each year operating expensesfor CHDOs. These funds provide operating funds to Community Housing DevelopmentOrganizations based on financial need and the expectation that the organization is utilizing or willutilize the City's HOME CHDO set aside funding within 24 months of the award.

HOME funding provided for CHDO operating expenses may not exceed $50,000 or 50/" of theorganization's total annual operating expenses for that fiscal year, whichever is greater. CHDOoperating expense funds may not supplant CHDO set-aside funds for project costs.

CertificationTo be eligible to receive HOME CHDO set-aside funding and Operating Assistance Grants, aCHDO must be certified by the City of Dallas. CHDO certification must be done prior to thecommitment of funds for a set-aside development, and there cannot be a general CHDOcertification. The City can work in advance to determine if a CHDO will likely meet therequirements for certification prior to funding considerations. A CHDO must continue to becertified throughout the development of a project and during the affordability period. the City hasdeveloped the "Community Housing Development Organization (CHDO) Policy, Procedure, andStandards" document to outline the process and requirements for CHDO certification. This canbe found in Appendix 5.

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Strategies, Tools, and Programs that Will Require Additional Action

Housing Trust FundEstablish a Dallas Housing Trust Fund (DHTF) that allows monies to be used to make loans tosupport the production goals of the Housing Policy. At a future date, staff will seek Councilapproval to authorize a one-time transfer of a minimum of $7 million in unencumbered fundbalances from high-performing Tax lncrement Financing Districts (TlFs), as well as $7 millionfrom Dallas Water Utility funding set aside to support developments. Staff will further researchpotential dedicated revenue sources for the DHTF, including unencumbered fund balances fromhigh-performing TlFs, property tax revenues from developments that have been built onpreviously City-owned land, proceeds from the sale of properties acquired by the City followingnon-tax lien foreclosures, among other sources.

Tax lncrement FinancingCreation of a non-contiguous Tax lncrement Finance District for areas not already located in anexisting TIF District will leverage TIF on projects that propose to meet the unit production goalswith affordabi lity requirements.

Neighborhood Empowerment ZonesAt a future date, staff will seek council approval to designate Neighborhood Empowerment Zones(NEZ) in certain Reinvestment Areas. Once a NEZ is established, staff will implement the followingprograms and strategies to preserve affordability and deconcentrate RECAP:

o d Froperty tax lreeze for up to ten (10) years for homeowners if they are makingimprovements to their property resulting in more lhan 25"h increase in value,

o development fee rebates (permits, planning, zoning, parkland dedication, landscape &tree mitigation),

. encourage lncentive Zoning/Density Bonuses to support the creation of mixed incomecommunities,

. allow Accessory Dwelling Units,o designate Homestead Preservation District overlay where applicable, and

Sublease ProgramFurthermore, staff will pursue council approval to create a Sublease Program which incentives alandlord/developer to facilitate the rental of units to voucher holders. This program is administeredthrough the Dallas Housing Finance Corporation.

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APPENDICES

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APPENDIX 1

Housing Policy Task Force Structure and Leadership

Focus areasEach focus area should be led by an expert or two in the field and supported by a member of stafffrom the Housing & Neighborhood Revitalization Department. The focus area should include inputfrom a broad range of key stakeholders who are representatives from private and public sectorentities whose activities have significant impact on the creation and preservation of affordablehousing and City departments. Each representative should have enough experience andresponsibility within the relevant organization to fully contribute to the committee.

Multifamily developmento External facilitator: real estate and/or finance expert in multifamily housingo At least one key stakeholder from each of the following groups: Sustainable

Development and Construction staff, Department of Housing and NeighborhoodRevitalization staff, Planning & Urban Design staff, associations of builders andcontractors, organizations of real estate professionals, and at least one developerand/or builder.

a

a

a

a

Single family and ownership developmento External facilitator: real estate and/or finance expert in owner-occupied housingo At least one key stakeholder from each of the following groups: Sustainable

Development and Construction staff, Office of Economic Development staff,Department of Housing and Neighborhood Revitalization staff, Planning & UrbanDesign staff, associations of builders and contractors, organizations of real estateprofessionals, associations of Realtors/Realtists, at least one developer and/orbuilder, and one Community Housing Development Organization executive.

Affordability preservationo External facilitator: housing advocateo At least one key stakeholder from each of the following groups: the Office of Fair

Housing and Human Rights staff, the Office of Welcoming Communities andlmmigrant Affairs staff, the Office of Equity staff, the Office of Community Carestaff, the Department of Code Compliance Services staff, the Office of HomelessSolutions staff, Dallas Housing Authority staff, associations of Realtors/Realtists,and at least two community leaders/advocates as recommended by the director ofthe Department of Housing and Neighborhood Revitalization.

Neighborhood investmento External facilitator: community development professionalo At least one key stakeholder from each of the following groups: Department of

Housing and Neighborhood Revitalization staff, Department of Public Works staff,Dallas Water Utilities staff, Park and Recreation Department staff, representativesfrom at least one utility service provider, Texas Department of Transportation staff,Dallas Area Rapid Transit staff, real estate and civil engineering professionals,community planners, a certified Community Housing Development Organization,and at least one developer and/or builder.

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a Support and fundingo Externalfacilitators: one philanthropist and one capital markets/banking experto At least one key stakeholder from each of the following groups: Housing and

Neighborhood Revitalization staff, Office of Economic Development staff, Office ofStrategic Partnerships and Government Affairs staff, Dallas Housing FinanceCorporation, Community Development Commission, Dallas Development Fund,Community Reinvestment Act lenders, associations of Realtors/Realtists,Community Development Finance lnstitution representative, Dallas HousingAuthority, at least one philanthropic organization, several certified CommunityHousing Development Organizations, and legal aid groups.

Communication and meetingsln order to encourage committee participation from a broad and diverse segment of the public,staff from the Department of Housing & Neighborhood Revitalization and task force facilitatorsengage in the following marketing efforts:

o staff will post a calendar of scheduled meetings and meeting agendas athttp:i/www.dallashousi nqpolicv.comstaff will schedule meetings at facilities that offer free parking and accessible meetingspacestaff will send out meeting notices and informational updates to a large list of individualswho have asked to be notified of housing task force meetings and other housing-relatedNEWS

the chairpersons of each committee will conduct outreach within their broad networks.

Meetings will be held as needed and the housing policy task force will report to the city councilcommittee designated by the city manager.

This task force will be successful when it has stakeholder engagement that creates programs,strategies, and tools that catalyze equitable development, preserve affordability, and growcommunity investment.

The task force will:. continue to increase the number of people who attend meetingso broaden the variety and diversity of voices, organizations, and community members heardr listen to stakeholders, elevate ideas, and communicate back to City leadership unmet

needs as well as program, strategy, and tool ideas for improvement. develop programs, strategies, and tools that respond to community needs and concerns

on the ground, policies as listed in CHP, and future program ideas that come to light.

ModificationsThe City Manager may modify Housing Policy Task Force structure and leadership focus areas,communication and meetings provisions in this Appendix 1 to increase its effectiveness and willnotify by memorandum the City Council, the Housing Policy Task Force steering committee, andthe city secretary of any changes.

a

a

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191864APPENDIX 2Single Family Development Underwriting

A. Eligible Developer Applicants

The City of Dallas willfund developers of affordable single-family homebuyer units, including for-profit developers, non-profit developers, and City of Dallas-designated CHDOs, with City of DallasHOME single-family development program funds. Developers must demonstrate the capacity andprevious experience developing projects of the type presented in their proposals. Prior tocommitting funds, the City of Dallas will review the status of any organization seeking funds fromthe CHDO set-aside to ensure that it meets all HOME requirements and that it has sufficient staffand financial capacity to carry out the project.

Project LocationProjects must be located within the city limits of Dallas.

Project TypesFunds will be provided for new construction projects. ln general, the City of Dallas will require thatall homes constructed have a minimum square footage of 1,200 sq ft, at least 3 bedrooms, andat least 1.5 bathrooms. RFPs issued by the City of Dallas may further specify or provide priorityfor eligible project types.

Parameters of HOME lnvestmentApplications must include an investment of $1,000 in HOME funds per HOME unit. ln no case willthe City of Dallas investment exceed the maximum HOME investment allowed under 24 CFR92.250.

Additionally, for projects involving both City of Dallas other HOME funds, the combined HOMEfunding investment shall not exceed the total maximum HOME investment allowed under 24 CFR92.250.

Typically, the City of Dallas will also establish a maximum cap on its investment in a single home.Such a limit will be based on the availability of funding and other City of Dallas priorities and willbe addressed in any NOFA issued by the City of Dallas.

B. Eligible CostsCosts funded with the City of Dallas HOME funds must be eligible according to HOME Final Rule24 CFR92.206. The following additional limitations also apply:

o HOME funds shall not be used for luxury improvements accordinglo 24 CFR 92.205.. Acquisition costs shall be supported by an independent appraisal of the property.

Acquisition costs exceeding the appraised value of the property will be ineligible for HOMEfunding reimbursement.

o HOME funds shall not be used for non-residential accessory structures such as free-standing garages, carports, or storage structures. Applicants must delineate project costsin a manner that allows free-standing structures to be clearly paid for using other projectfunds.

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City of Dallas Eligible Project Soft GostsThe HOME program allows the City of Dallas to include, as project costs, its internal soft costsspecifically attributable to a HOME project. These may include consulting, legal, inspection, andstaff costs associated with reviewing, processing, and overseeing the award of funds to theproject. Projects must provide budget allowances for "City of Dallas-Lender Due Diligence & LegalCosts" in the project's sources and uses.

Cost ReasonablenessPer the requirements of 92.250(b) and 2 CFR 200 Subpart E (formerly known as OMB CircularA-87), all project costs must be reasonable, whether paid directly with HOME funds or not. TheCity of Dallas will review project costs, including hard and soft costs, to evaluate theirreasonableness and may, at its option, require applicants to obtain additional quotes, bids, orestimates of costs.

ldentity of lnterestDevelopers must disclose any identity of interest situations that may occur when contracting withrelated companies during either the development or ongoing operation of the project. City ofDallas staff must be allowed the opportunity to conduct a cost analysis to determine costsreasonableness. Applications may be determined ineligible if access is not granted or costs aredetermined to be unreasonable.

C. Property StandardsTo meet both HOME regulations and City of Dallas goals, all HOME-funded projects must meetcertain physical standards intended to provide quality affordable housing that is durable andenergy efficient.

Construction must meet all local codes. City of Dallas has adopted and enforces the followingcodes with amendments:

. 2012lnternational Building Codeo 2012lnternational Mechanical Codeo 2009 lnternational Energy Conservation Codeo 2012lnternational Existing Building Codeo 2011 National Electric Code. Chapter 11 of the 2009 lnternational Residential Code

All HOME projects must meet applicable Section 504/UFAS requirements. Pursuant to 24 CFR8.29, single-family housing developed with Federal funds must be made accessible upon therequest of the prospective buyer if the nature of the prospective occupant's disability so requires.Developers must ensure that projects are designed in a way that can accommodate such arequest. Should a prospective buyer request a modification to make a unit accessible, Developermust work with the homebuyer to provide the specific features that meet the need(s) of theprospective homebuyer or occupant. lf the design features that are needed for the buyer aredesign features that are covered in UFAS, those features must comply with the UFAS standard.Developers shall be permitted to depart from the standard in order to have thehomebuyer/occupant's needs met.

Site shall be served by public sewer, public water, and public road. Sites should have readyaccess to recreational opportunities such as parks, playgrounds, etc., nearby shopping and

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services including transportation, grocery, banking, and medical facilities, and otherwise belocated in neighborhoods that provide amenities that support residential development. The Cityof Dallas also generally prefers that sites have safe, walkable connections-including sidewalks-to the surrounding neighborhood.Site shall be in a designated Fire District or served by a Fire Department;

Units must be equipped with the following appliances: Refrigerator, range/oven, dishwasher, andgarbage disposal. Developers may also propose to include in-unit clothes washers and dryers,microwave/vent fan combination units, as appropriate. lf the Energy Star program rates the typeof appliances being installed, the developer must furnish the units with Energy Star ratedappliances. Note however that not all appliances are rated by the Energy Star program.

D. Sales PriceHousing developed with HOME funds must be modest, and the sales/purchase prices for homesdeveloped under this program cannot exceed the HOME Homeownership Value Limits publishedby HUD in effect at the time of project commitment. The City of Dallas will identify the applicablelimits in any NOFA issued.

Units produced under the City of Dallas' single-family development program must be sold at thefair market value as determined by an "as-completed" or "subject to completion" appraisalcompleted by an independent state licensed appraiser. Developers shall submit such an appraisalprior to project commitment, and the City of Dallas may require an updated appraisal prior toconstruction completion if the appraisal is more than 9 months old at that point. Any reductions inlist or sales price below the City of Dallas-approved appraised value must be approved in writingby the City of Dallas and will generally require updated market information.

E. Eligible HomebuyersHomebuyers for units produced under the City of Dallas single-family development program mustmeet the eligibility criteria set forth in the City of Dallas Homebuyer Assistance Program (DHAP)guidelines.

F. Environmental Review RequirementsFederally-assisted projects are subject to a variety of environmental requirements. Developersshould be familiar with these requirements and are strongly encouraged to discuss any questionsthey have with City of Dallas staff prior to entering into a purchase agreement or submitting anapplication.

All projects shall be implemented in accordance with environmental review regulations as defined24 CFR Part 58.

The City of Dallas shall be responsible for conducting the environmental review and completingall necessary public notifications, and the request for release of funds (RROF) from HUD. Theapplicant is responsible for cooperating with the City of Dallas in the environmental review processand providing information necessary for the City of Dallas to fulfill its responsibilities under Part58 and other applicable regulations.

Submitting an application for HOME funds triggers environmental review requirements under 24CFR 58, including the National Environmental Policy Act (NEPA). Once an application for federalfunds is submitted, a development proposal is now subject to the environmental review

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requirements and requires an environmental clearance and issuance of a Release of Funds(ROF) by the US Department of Housing and Urban Development.

Developers are prohibited from undertaking or committing or expending any funds to (includingnon-federal funds) any physical or choice-limiting actions on the site prior to an environmentalclearance as required by Part 58. Physical and choice limiting actions include, but are not limitedto, property acquisition, demolition, movement, rehabilitation, conversion, repair or construction.This prohibition applies regardless of whether federal or non-federal funds are used, and takinga choice limiting action prior to completion of the required environmental clearance process willresult in the denial of any HOME funds from the City of Dallas.

G. Other Federal Requirements

Nondiscrimination and Equal OpportunityThe following federal nondiscrimination and equal opportunity guidelines apply to all projects andaffect both development and sales of assisted housing:

The Fair Housing Acl (42 U.S.C. 3601-19) and implementing regulations at 24 CFR part100 et seq.;Executive Order 11063, as amended by Executive Order 12259 (3 CFR, 1959-'1963Comp., p. 652 and 3 CFR, 1980 Comp., p.307) (EqualOpportunity in Housing Programs)and implementing regulations at 24 CFR part 107;Title Vl of the Civil Rights Act of 1964 (42 U.S.C. 2000d- 2000d-4) (Nondiscrimination inFederally Assisted Programs) and implementing regulations at 24 CFR part 1;The Age Discrimination Act ol 1975 (42 U.S.C. 6101-6107) and implementing regulationsat24 CFR part 146;Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementingregulations at part 8 of this title;Title ll of the Americans with Disabilities Act, 42 U.S.C. 12101 et seq.; 24 CFR part 8;Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) andimplementing regulations al24 CFR part 135;Executive Order 11246, as amended by Executive Orders 11375, [[Page 41]l 11478,12086, and12107 (3 CFR, 1964-1965 Comp., p.339;3 CFR, 1966- 1970 Comp., p.684;3 CFR, 1966-1970 Comp., p. 803; 3 CFR, 1978 Comp., p.230; and 3 CFR, 1978 Comp.,p. 264, respectively) (Equal Employment Opportunity Programs) and implementingregulations at 41 CFR chapter 60;Executive Order 11625, as amended by Executive Order 12007 (3 CFR, 1971- 1975Comp., p. 616 and 3 CFR, 1977 Comp., p. 139) (Minority Business Enterprises); ExecutiveOrder 12432 (3 CFR, 1983 Comp., p. 198) (Minority Business Enterprise Development);andExecutive Order 12138, as amended by Executive Order 12608 (3 CFR, 1977 Comp., p.393 and 3 CFR, 1987 Comp., p. 245) (Women's Business Enterprise). Thenondiscrimination provisions of Section 282 ol the National Affordable Housing Act of1982.

Uniform Relocation Act (URA)All projects fall under requirements of the URA. Any project resulting in permanentrelocation/displacement of households will not be funded by the City of Dallas. Applicants mustfurther document that any purchase of property meets the requirements of URA, including

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191864provision of notices to the seller identilying the transaction as a voluntary sale not under the threatof eminent domain. To ensure compliance with URA, applicants should consult the City of Dallasto understand the requirements of URA and reference the URA forms included in the RFP priorto submitting an application involving an occupied property.

Davis BaconDavis Bacon federal prevailing wage requirements shall apply to all projects with 12 or more unitsassisted with HOME funds.

Excluded PartiesThe City of Dallas will not fund projects owned, developed, or otherwise sponsored by anyindividual, corporation, or other entity that is suspended, debarred, or otherwise precluded fromreceiving federal awards. Nor may the developer contract with any other entity (including but notlimited to builders/general contractors, property management companies, or other members ofthe development team) that are suspended, debarred, or othenruise so precluded. Similarly, thegeneral contractor will be required to determine that subcontractors are not so precluded.

H. Ongoing Project Requirements

DeadlinesConstruction Start- lf construction is not started within 12 months of the date the City of Dallascommits funds to a project, the commitment will be subject to cancellation. lf the project iscancelled as a result of failure to meet this deadline, the Developer must repay to the City ofDallas any HOME funds disbursed for the project.

Completion Deadline Project completion occurs when construction is complete, all HOME fundshave been disbursed by the City of Dallas and drawn from the US Treasury, title to the propertyhas transferred to an eligible buyer, and required completion data has been entered in HUD'sf DlS system. Project completion must occur within 2years of the date of commitment of funds tothe project. lf the Developer fails to meet this 2-year deadline, it must repay to the City of Dallasany HOME funds disbursed for the project.

Sa/es Deadline- Pursuant to 24 CFR 92.254(a)(3), Developers must have a ratified sales contractwith an eligible buyer for each HOME-funded unit within nine (9) months of completion ofconstruction or the unsold units must be converted to rental housing or the project will be deemedineligible and all HOME funds drawn must be repaid to HUD.

lf a unit is unsold after six (6) months, the Developer must present an updated sales and marketingplan to the City of Dallas outlining steps being taken to identify buyers. At the City of Dallas option,the Developer may be required to i) take further steps--such as listing the home with a licensedrealtor, adjusting the sales price, etc.-as the City of Dallas may require to facilitate the sale ofthe home or ii) to transfer title to the City of Dallas or to another entity selected by the City ofDallas that can otherwise identify buyers prior to the regulatory deadline.

At the City of Dallas option, if a unit remains unsold after nine (9) months, the developer shall berequired i) to repay the entire HOME investment, including any City of Dallas project soft costs; ii)to convert the project to rental housing in accordance with 24 CFR 92.252; or iii) to transfer titleto the City of Dallas or to another entity selected by the City of Dallas for conversion to rentalhousing.

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Units converted to rental housing must be rented to eligible tenants in accordance with 24 CFR92.252, which includes tenant income eligibility and rent limit requirements. Further, any unitsconverted to rental properties shall be operated in compliance with the City of Dallas RentalHousing Program guidelines.

Reporting and Record KeepingTo allow effective oversight of funded projects and document compliance with applicable HOMErequirements, all projects must submit periodic reports to the City of Dallas. While this sectionoutlines standard reporting requirements, the City of Dallas reserves the right to require additionalreporting or to alter the reporting format or frequency based on future changes to HOMErequirements or City of Dallas policy. Additionally the City of Dallas reserves the right to requireadditional or more frequent reporting for projects with compliance deficiencies.

Developers are required to report monthly during the development phase and sales phase.During the construction phase, developers must provide monthly reports detailingconstruction progress and barriers to progress, copies of invoices being paid, andevidence of appropriate lien waivers.During the sales phase, developers are required to provide monthly reports detailing thenumber of additional sales, total sales, and marketing activity. These reports are requireduntil all units are sold.The City of Dallas may require more frequent reporting due to findings identified duringthe development and sales phases.At the City of Dallas option, Developers may be required to obtain and submit an audit ofproject costs (i.e. cost certification) prepared by an independent Certified Public Account.Developers shall allow City of Dallas, HUD, State of Texas, the Comptroller General of theUnited States (aka the GAO), and all other pertinent Federal or State agencies or theirdesignated representative the right to inspect records and property.Conflict of lnterest

To comply with HOME requirements and to maintain a high standard of accountability to thepublic, conflicts of interest and perceived conflicts of interest must be avoided. Developers shallmaintain compliance with all HUD conflict of interest provisions as stated in 92.356(f).

Developers with officers, employees, family members, consultants, or agents that are otheniviseeligible to purchase HOME-funded units must receive waiver/approval from City of Dallas staffbefore entering into a sales agreement with HOME eligible employees. 92.356(f) provisions applyto all HOME projects.

L Structure of Transaction

Loan Types and TermsThe City of Dallas will provide HOME funds in the form of a loan to the entity that owns theproperty. No grants will be awarded, and funding commitments are not transferable without priorwritten City of Dallas approval.

The City of Dallas HOME Loan may be used for acquisition and construction financing. Proceedsof the HOME loan will only be released following satisfaction of all requirements outlined below.

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1e1864ln allcases, the HOME loan will:

o Have a maximum term of 2 years;r Be repayable in full upon sale, refinancing, or transfer of the property or upon maturity,

except that repayment will be limited to the net proceeds of a City of Dallas-approved saleto a low-income buyer. Net sales proceeds will exclude any portion of the sale proceedsused to repay senior construction debt, return of City of Dallas-recognized developerequity, approved sales costs, and any HOME-assistance transferred to the buyer(s) atclosing as direct homebuyer assistance.; and

o Be secured with a promissory note, mortgage, and appropriate UCC liens. Mortgages willbe recorded with the Dallas County Recorder of Deeds and generally may be subordinateonly to an approved amortizing first mortgage.

GuaranteesUnless othenruise determined by the City of Dallas, all underlying individuals, corporate entities,partnerships, or limited liability companies with an interest in the project will be required to providea completion guarantee including provisions guaranteeing construction completion of the project.For nonprofit organizations, including community housing development organizations (CHDOs),a guarantee shall not be required, but in all cases the City of Dallas may require a performancebond or irrevocable letter of credit acceptable to the City of Dallas to ensure project completion.

HOME Agreementln addition to any financing documents, developers of HOME-financed projects must sign aHOME agreement with the City of Dallas. The HOME agreement will identify requirements forcompliance with the HOME regulations and the City of Dallas Single-Family Development.Program requirements and will remain in effect in the event of any prepayment of the HOME loan.

J. Underwriting & Subsidy Layering Reviews

Market DemandDevelopers must, as part of their application, provide evidence of sufficient demand for theproposed units. Developers shall provide information from the multiple listing seruice pertainingto recent sales in the neighborhood, average time on the market for recent sales, availability ofother product and average "months of supply" currently available, and any known or plannedprojects.

Additionally, Developers must complete the HOME Sales and Marketing Plan, identifying amongother items the profile of typical buyers, relationships with homeownership counseling agenciesor other sources of buyer referrals, and plans for marketing the homes.

ln some cases, the City of Dallas may only commit to a specific project (or may limit the numberof projects under construction by a given developer) upon demonstration that a home has beenpre-sold to an identified low-income buyer who has, at least, executed a reseruation or initialpurchase agreement with the Developer.

Project UnderwritingAll HOME applications must include financial statements from all underlying owners andguarantors. Developers must have a net worth equal to 10% of the total development cost withnet liquid assets equal to 3% of the total development cost.

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Applicant must provide the amounts and terms for any other financing being provided to theproject.

Proforma RequirementsThe proforma must explicitly show

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An itemized breakdown of development hard and soft costs by unit including anyallowances for soft costs such as architectural fees, carrying costs, etc;The hard costs of any stand-alone accessory buildings, including free-standing garages,carports, or storage structures should be specifically itemized in the Development Sourcesand Uses so that the City of Dallas can complete preliminary HOME cost allocationcalculations. (Stand-alone accessory structures like a detached garage may be includedin the project but are not HOME-eligible and must be paid for with another funding source.)Costs and fees to be paid to the City of Dallas as permitted by the HOME program. TheHOME program allows the City of Dallas to include, as project costs, its internal soft costsspecifically attributable to the project. These may include consulting, legal, inspection, andstaff costs associated with reviewing, processing, and monitoring award of funds to aproject. The City of Dallas will notify Developers of the amounts to include in theirDevelopment Sources and Uses for "City of Dallas-Lender Due Diligence & Legal Costs."Estimates of the sales transaction to an eligible homebuyer, including a calculation of theproposed buyer's ability to qualify for a mortgage meeting City of Dallas requirements, theanticipated need to provide direct HOME assistance (e.9. downpayment and closing costassistance) to the buyer, projected sales costs (e.9. realtor's commissions), and thedistribution of sales proceeds (including toward repayment of private constructionfinancing)

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Cost LimitationsAll project costs must be reasonable and customary. The City of Dallas reserves the right to reviewany line-item cost to ensure that total project costs are not excessive. Additionally, HOME projectswill be subject to the following specific cost limitations:

o The maximum allowable developer fee is 15o/" of total development costs less thedeveloper fee itself and seller's closing costs.

. Acquisition costs are limited to fair market value as determined by a third-party appraisal.

. Unless prior approval has been obtained from the City of Dallas, all project hard costs andall project professional fees should be the result of a competitive bidding process. Whiledevelopers are not subject to federal procurement rules and may use less formal bidprocesses, the City of Dallas generally expects developers to seek multiple bids andidentify the most advantageous bidder based on cost, track record, and other pertinentfactors.

Other Public Funding SourcesDevelopers must disclose all other public and private sources or applications for funding with theirinitial HOME Single-Family Development application to the City of Dallas at the time of applicationand upon receiving any additional commitments of public source funding. The City of Dallas willconduct a subsidy layering review as part of the underwriting process for all projects. Using itsunderuvriting criteria, the City of Dallas will assess the project and may require changes to thetransaction to ensure that return to the owner/developer are not excessive. Changes may includea reduction in HOME funds awarded.

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1e1864The City of Dallas will consider adjusting its underwriting in consultation with other public funders,if applicable, to the project. The City of Dallas retains, at its sole discretion, the power to decidewhether to accept alternative standards.

K. Construction Process

City of Dallas Construction lnspectionsThe City of Dallas must be provided with copies of all contractor invoices and provided reasonablenotice of monthly draw inspections during the construction period. City of Dallas staff willparticipate in all draw reviews whether or not the specific draw is being funded with HOME orother project funds and conduct inspections to ensure that the project is progressing and thatwork completed is consistent with all applicable HOME requirements.

Davis BaconWhen Davis Bacon applies to a project, the City of Dallas must be provided with compliancedocumentation throughout the construction period. Prior to commencing construction, the City ofDallas must approve current wage determinations applicable to the project. The contractor will berequired to provide weekly payroll forms to the City of Dallas and allow access to the site andworkers for the purpose of completing worker interviews.

Drawing City of Dallas HOME FundsProceeds of the HOME loan will only be released as reimbursement for eligible project costsfollowing:

Review and acceptance of appropriate source documentation by the City of Dallasincluding evidence of appropriate lien waivers and/or title endorsements.A determination by the City of Dallas that all HOME requirements pertaining to thedevelopment of the Project have been met, including but not limited to monitoring of DavisBacon compliance.

For nonprofit developers, including CHDOs, the City of Dallas may release payment based uponoutstanding invoices for costs incurred and work completed. ln such cases, the City of Dallasreserves the right to disburse through a title company, directly to the vendor, or with two-partychecks.

Project CloseoutDevelopers are required to submit homebuyer eligibility packets to the City for approval of thehomebuyers. Data shall include elderly status, race, gender, female head of household, numberof household members, and income.

The City of Dallas requires a copy of the final project sources and uses statement and, at the Cityof Dallas option, may require the submission of the project cost certification prepared by anindependent Certified Public Accountant following completion of construction and payment of alldevelopment costs.

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APPENDIX 3Rental Development Underwriting

ln reviewing applications for HOME assistance, as required by $92.250(b) and prudent businesspractices, the City's underwriting framework includes evaluations of:

Regulatory requirements applicable to the project, including compliance (or ability tobecome compliant) with HOME's affordability restrictions, property standards, and cross-cutting federal requirements;Market risk, including whether or not sufficient demand exists for the project, theanticipated lease-up period, and whether general economic conditions and othercompetition supports ongoing viability;Developer risk, focusing on whether the owner/developer (including but not limited to theunderlying owners of special purpose entities) have the technical capacity to develop andoperate the property and the financial capacity to safeguard public funds and backstopthe project if the event of poor financial performance; andProiect risk (or "financial underwriting"), testing the economic and financialprojectionsfor the transaction including both sources and uses as well as ongoing operatingassumptions. This includes confirmation that allsources of project financing are available,commercially reasonable, and have been appropriately maximized prior to awardingHOME funds.

Market AssessmentAll HOME project applications must include a third-party market study prepared in a mannerconsistent with TDHCA's market analysis requirements. Unless othenruise approved by the City,market studies shall be prepared by providers included on the list of TDHCA Approved MarketAnalysts. Owner's may generally submit the market study used in conjunction with the Owner'sLIHTC application, if applicable. Market studies must be less than one year old at the time ofcommitment of HOME funds. For market studies that are more than one year old, the City willtypically require an update from the original analyst or a new market study from another analyst.Proposed rent levels must be supported by the applicant's market study and be within HOMEregulatory limits.

Additionally, the market study should demonstrate the following:

All units, including any "market rate" units as well as any units with income/rent restrictionimposed by other programs such as LIHTC, must demonstrate viability within the primarymarket area taking into account any known rent concessions being offered by competingproperties;lncome and rent restricted units must have "discounts" of at least 15% relative tocomparable un-restricted units;Achievable occupancy rates, based on a comparison of comparable properties in theprimary market area, must be at or above 95% (physical occupancy);Capture rate for the development as a whole is no more than 10%, and no capture ratefor specific unit sizes (e.9. 3-bedroom units) exceeds 25"/": andAbsorption can be expected to result in underwritten occupancy levels within six (6)months of units being ready for occupancy.

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For projects not meeting these standards the City, in its sole discretion, may also consider thefollowing:

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For project targeting special needs populations (e.9. homeless households, domesticviolence victims, veterans, or other specific subpopulations), the City may accept highercapture rates if data from the local Continuum of Care and/or service providersspecializing in the targeted populations (e.9. VA service centers) suggest an adequatepipeline of eligible renters exists and will be consistently referred to the development.For existing projects being rehabilitated, the City will consider the recent operating historyof the project in terms of actual rents charged/received, eligibility of in-place tenants, andthe like for evidence that the development's projections are supported by actualperformance.

The City may also consider offsetting the risk of relatively "weaker" market study findings byoffering HOME assistance as permanent debt only, to be disbursed following actual lease-up ofthe development at proforma levels and achievement of stabilized occupancy.

Developer and Development Teamln most cases, projects considered by the City will be owned by single-purpose, single-assetentities created to hold title the development. For various purposes, including structuringnecessary to comply with industry norms and take advantage of other funding sources such asLIHTC, the "ownef'and "developer" of a project are often legally distinct entities, even if ultimatelyowned and controlled by the same underlying parties.

Developer Technical/Professional Capacityln evaluating the capacity of the "developef' the City will use the term more loosely to refercollectively to the underlying corporate entities and individuals that willown and controlthe single-purpose entity (excluding the investor member/limited partner). Additionally, the City requiresvarious guarantees and indemnities from all of the underlying corporate and individual owners ofthe various limited partnership or limited liability corporation entities involved in the ownership anddevelopment of the project.Developers should demonstrate:

Recent, ongoing, and successful experience with the development of similar regulatedaffordable housing; andThe presence of adequate staff, with specific experience appropriate to their role in theproject, to successfully implement and oversee the project. This includes the assemblyand oversight of the development team.

The City requires applicants to provide lists of real estate owned (includingpartnership/membership interests) by the developer as well as all projects underway. The City willreview the performance of those projects, including financial factors like net occupancy, actualDCR, cash flow received, outstanding loan balances, and net equity of individual projects and thedeveloper's overall portfolio.

Applicants are also required to provide descriptions of the role played by specific staff membersrelative to the proposed project along with resumes or other similar information demonstratingexperience appropriate to the assigned staff member's role.

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Financial CapacityDevelopers must also demonstrate the financial capacity to support the proposed project bothduring construction and lease-up as well during ongoing operations. This includes not just thatthe applicant has sufficient financial resources but that it has adequate financial systems in placeto appropriately manage project funding, accurately account for all project costs, and providereliable reporting to the City and other project funders.

At minimum, the City will review audited financial statements, interim financial statements, andindividual personalfinancial statements to ensure that:

The "primary" development entity's most recent audit must demonstrate compliance withGenerally Accepted Accounting Principles (GAAP) and must not express materialweaknesses in the entity's system of internal controls or financial management systems;The developer's net worth (including the un-duplicated net worth of other guarantors) isequal to at least 1Q% oI the total development cost of all projects underway (i.e. those thathave received funding commitments from HOME or LIHTC but have not yet beencompleted and converted to permanent financing); andThe developer has net liquid assets (current assets less current liabilities) equal to at least3o/o of the total development cost of all projects undenruay.

Development TeamThe City will also review the capacity of the development team including but not limited to thegeneral contractor, architect, engineer, market analyst, management company, accountant,attorney, and any other specialized professionals or consultants.

As a whole, the development team should have the skills and expertise necessary to successfullycomplete and operate the development. lnsomuch as possible, on balance the developmentteams should have worked successfully on other projects in the past. That is, while a developermay identify new development team members from project to project, an "entirely new" team maypresent added risk.

Additionally, when using development team members from outside of the region, the City willconsider whether assigned team members have recent local experience or have beensupplemented with local professionals. This may be particularly important for design professionalsand legalcounsel.

ln no case, may any owner/developer/applicant or any member of the development team be asuspended, debarred, or otherwise excluded party.

ldentify of lnterest Relationships & CostsApplicants must disclose all identity of interest relationships/contracts and/or costs involved in atransaction, including during the development period and following completion of the project. TheCity reserves the right to review any such costs further to ensure they are reasonable andconsistent with the costs expected from arms-length relationships.

An "ldentity of lnterest" (whether or not such term is capitalized) is any relationship based onfamily ties or financial interests between or among two or more entities involved in a project-related transaction which reasonably could give rise to a presumption that the entities may notoperate at arms-length. The City will take a broad approach to defining identities of interest and

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191864such reserve must be based on lease-up projections/cash-flow modeling and the lease-up (or absorption) period identified in the project's market study. ln evaluating theappropriateness of any lease-up reserve, the City will consider whether the developmentbudget includes specific line items for other start-up expenses that othenrrise are typicallypart of the ongoing operating budget for a development. This may include budgets formarketing, working capital, etc.Operating Reserve: An operating reserve equal to three (3) months of undenrvrittenoperating expenses, reserve deposits, and amortizing debt service must be included inthe development budget. The operating reserve is intended as an "unexpected rainy day"fund and will only be accessible after a prolect has achieved stabilized occupancy.Replacement Reserve: For acquisition-rehabilitation projects, a capitalized replacementreserve must be included in the development budget. The capitalized replacement reserveshould be funded at the greater of i) $1,000 per unit; or ii) the amount determined by acapital needs assessment approved by the City.Other: The City may consider other specialized reserves as appropriate based on uniquefeatures of the project and/or requirements of other funding sources. These may includespecial security reserves, supportive service reserves, or transition reserves for projectswith expiring project-based rental assistance contracts, etc.

Operating RevenuesThe City will review an applicant's projection of operating revenues to ensure they are reasonableand achievable both initially and through the affordability period. ln evaluating operating revenues,the City willtake into account the i) project-specific market study; ii) actual operating performancefrom other comparable projects including those from the applicant's existing portfolio of real-estateowned; iii) data available from comparable projects in the City's portfolio; and/or iv) informationavailable from actual performance within TDHCA's portfolio.For purposes of the long-term operating proforma, operating revenue projections cannot beincreased by more than 2"/o per year. The City reserves the right to "stress" proposals forunderwriting purposes to assess the impact of lower inflationary increases, such as modeling theimpact of only 1olo r'€Itt increases for the first three to five years of a project's affordability period.

RentsAll rents should be supported by the market study. lncluding the utility allowance, the gross rentfor any income/rent restricted unit should demonstrate at last a 15o/o "discount' compared tocomparable "market rate" units.

Additionally, to hedge against flat or declining rents to the owner in the event that income limits(and therefore rents) do not increase in a given year (particularly between commitment and lease-up), gross rents should demonstrate at least a 2.5% discount from the regulatory limit imposedon any income/rent restricted units by HOME, LIHTC, or other similar sources. As an alternativeto setting rents below the applicable regulatory limit, the City will consider increasing theallowance for vacancy by 2.5"/".

Non-Rental RevenueNon-rental revenue must be fully explained and conservatively estimates. ln general, no morethan $60-$240 per-unit, per-year may be budgeted in "other revenue" including that from tenant'sfees (such as fees for late payment of rent, nonsufficient funds, garage/carport upgrades, petfees, etc. or interest on operating account balances). Exceptions may be considered by the City

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based on the operating history of an acquisition/rehabilitation project or normalized operationsare other comparable properties in the same market area.VacancyTotal economic vacancy includes physical vacancy (a unit is unrented), bed debt (a unit isoccupied but the tenant is not paying rent), concessions (a unit has been leased for less than thebudgeted rent), and "loss to lease" (an pre-existing lease is less than the most recently approvedannual rent but will be adjusted upward at renewal).

ln all cases, based on the market study or other data available to the City, the City reserves theright to require higher vacancy projections. This may include higher vacancy rates for smalldevelopments (e.9. less than 20 unit) where standard percentage assumptions about vacancymay not be appropriate. Minimum allowances for vacancy must include:

5"/otor projects where all units are supported by a project-based rental assistance contractwith a term equal to or in excess of the affordability period (e.9. project-based Section 8);or7"/o tor all other projects.

As noted above, the minimum vacancy rate will be increasedby 2.5o/o if budgeted gross rents areat the applicable regulatory maximums.

Operating CostsThe City will review an applicant's projection of operating expenses to ensure they are reasonableand adequate to sustain ongoing operations of the project through the affordability period. lnevaluating a proposed operating budget, the City will compare projects costs to i) actualoperatingexpenses of comparable projects in the applicant's existing portfolio of real-estate owned(insomuch as possible, comparable projects will be in the same vicinity and operated by the samemanagement company); ii) actual operating expenses of other comparable projects in the City'sportfolio; iii) data available on the operating costs of affordable housing in the TDHCA portfolio;and/or iv) minimum per-unit, per-year allowances established by the City through periodic RFPsfor rental housing.

For purposes of the long-term operating proforma, operating expenses, including reservedeposits, will be inflated at no less than 3"/" per year. The City reserves the right to "stress"proposals for undenryriting purposes to assess the impact of higher operating cost factors, suchas modeling the impact of higher inflation rates in general of for specific items of cost (for example,assessing the impact of high rates of increase for insurance or development paid utility costs).

Selected ltems of Operating CostCiU HOME Monitoring Fee - Pursuant to 24 CFR 92.214(b)(1)(i), the City assesses an annualHOME monitoring fee. The operating budget for each project must include an allowance for theCity's annual HOME Monitoring Fee as specified in periodic RFPs issued by the City.

Propefty Management Fees - An allowance of 5"/" of effective gross income (i.e. gross rentpotential plus other revenues minus actual vacancy, bad debt, concessions, etc.) should beincluded. ln the event a lower management fee is proposed, the City will consider using a fee aslow as 3% provided the proposed management company is acceptable to the City and has agreedin writing to the lower fee.

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1 91 I64Property Taxes - Applicants must provide detailed explanations of property tax projections and,as applicable, provide documentation that any anticipated partial or full exemptions or paymentsin lieu of taxes (PILOT) have been approved by the appropriate tax assessor. ln the absence ofa tax exemption or PILOT, the operating budget must provide for a tax rate equal lo 1.25o/" of themarket value of the property or the City, at its option, may require confirmation from the taxassessor of the applicant's projection.

Replacement Reserue Deposits - The operating budget must include minimum replacementreserve deposits of:

o New Construction Family: $300 per-unit, per-yearo New Construction Senior: $250 per-unit, per-year. Rehabilitation: The greater of i) $300 per-unit, per-year; or ii) a higher amount established

by a CNA approved by the City.

Note: The City will reserve the right within a project's transactional documents to require periodicCNAs for all projects and to adjust ongoing replacement reserve deposits base on the results ofthe CNA to ensure that the replacement reserve is sufficient to address all anticipated needs forthe project's affordability period of the term of the City's loan, whichever is longer.

Items Payable only from Surplus CashCertain costs, sometimes identified by project owners as "operating costs," cannot be included inthe operating budget and will only be payable from surplus cash (aka cash flow). These include:

. lncentive Management Fees payable in addition to the allowable management fees notedabove, whether paid to related party or independent third-pafi management fees.

r Asset Management Fees payable to any investor, general or limited partner, or memberof the ownership entity.

. Deferred Developer Feeso Operating Deficit Loan Payments made to any related party including any investor, general

or limited partner, or members of the ownership entity.. Other payments to investors, general or limited partners, or members of the ownership

entity, however characterized, including but not limited to negative adjustors, yieldmaintenance fees, etc.

Ongoing Economic ViabilityThe City will review the ongoing economic viability of all projects, taking into account long-termprojections of revenue and expenses. Projects must demonstrate they can be expected to remainviable for at least the affordability period, taking into account trending assumptions noted above,as well as other any other changes in operating revenues or expenses that can reasonably beanticipated based on other information available to the City or other project funders. ln particular,the City will review the debt coverage ratio and operating margin as outlined below.

Debt Coverage RatioProjects must demonstrate a minimum debt coverage ratio (DCR) ol 1.25 (Net Operating lncomedivided by amortizing debt service) throughout the affordability period. ln some cases, for projectswith relatively small levels of mortgage debt, this may require a higher initial DCR to ensure thatthe DCR in later years remains at or above the appropriate level.

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191864Operating Marginln addition to considering the DCR, the City will review the operating margin (surplus cash dividedby total operating expenses and amortizing debt service). The operating margin must remain ator above 5"/o Ior the period of affordability.

Other Funding SourcesPrior to committing funds, all other funding sources necessary for a project must be identified,committed in writing, and consistent with the both the City's undenryriting requirements and theaffordability restrictions of the HOME program. ln general, developers must make all reasonableefforts to maximize the availability of other funding sources, including conventional mortgage debtand tax credit equity (as applicable), within commercially available and reasonable terms.

Additionally, restrictions or limitations imposed by other funding sources cannot conflict with anyapplicable HOME requirements and cannot, in the discretion of the City, create undue risk to theCity.

Senior Mortgage DebtAny amortizing mortgage debt that will be senior to the City's HOME loan must:

r Provide fixed-rate financing;r Have a term equal to or in excess of the HOME affordability period. The affordability period

will generally be 15 years beyond the date of "project completion" as defined in 24 CFR92.2 for acquisition/rehabilitation projects and 20 years for new construction projects. lnpractice, the date of "project completion" will not be the same as "placed in service" datefor tax purposes but for most projects will occur prior to permanent loan conversionfollowing property stabilization. lnsomuch as possible, the first mortgage should have thelongest amortization period available but cannot balloon prior to the expiration of theaffordability period; and

r Allow the City's HOME covenant running with the land (i.e. the deed restrictions imposingthe HOME affordability requirements) to be recorded senior to all other financingdocuments such that the HOME covenant is not extinguished in the case of foreclosureby a senior lender. Note the City HOME loan itself will be junior to conventional amortizingloans; only the deed restrictions must be senior.

Tax Credit EquityProjections of tax credit equity must be documented by letters of intent or other similar offers toparticipate in the transaction by the proposed tax credit investor. Prior to committing funds, theapplicant must provide evidence it has received a tax credit reservation from TDHCA and providethe proposed limited partnership agreement or operating agreement, as applicable, documentingthe terms of the equity investment.

The City will review proposed equity pricing against information from other projects in the regionto assess whether the pricing and terms are reasonable.

Deferred Developer FeeIt is common for projects to include delerred developer fees as a financing source. The City willgenerally require:

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That projections of surplus cash available (after any cash{low contingent payment duethe City) be sufficient to repay the deferred fee within 15 years (notwithstanding other"waterfall" provisions in the partnership or operating agreement, the City will assume thatall surplus cash distributions will be credited against the developer fee);That following the initial application to the City, the level of deferred developer fee withremain fixed (in nominal dollar terms) in the event City underwriting identifies costreductions, increases in other funding sources, or other changes that result in a netreduction of the "gap" to be filled with HOME funds; andThat any net savings (or increased funding sources including but not limited to upwardadjusters for tax credit equity) at project completion and cost certification will be used inequal parts to reduce the deferred developer fee and the City's permanent HOME loan. lnthe event savings are sufficient to eliminate the deferred fee in this manner, any remainingnet savings will be used to further reduce the City's HOME loan, or in the sole discretionof the City, to increase the operating reserve.

Exceptions and lnterpretationThe City has developed these guidelines for several reasons. Not only are they required by HUDas part of the City's role as a HOME PJ, but more generally they are intended to provide clarity toapplicants on what the City expects and transparency about the "rules of the road." However, theCity recognizes that it cannot pre-emptively identify every possible specialcircumstance that maywarrant an exception to its general requirements, nor can it identify every possible "loophole"whereby a creative presentation of costs or other projections might subvert the general need tobalancing of viability and reasonable returns, risk to the City and public benefit.

Consequently, the City reserves the right to waive specific underuvriting criteria for specificprojects when, in its judgement, the purposes of the program can be better achieved withouttaking on undue risk. When waiving any given requirement, the City may impose additionalspecialconditions or business terms that are not otheruvise typically applied to all projects.For administrative ease, the City may also align its undenryriting standards with those required byother public funders involved in a given transaction, particularly if those standards are morerestrictive or conservative than the City's. However, the City retains the right, in its sole discretion,to decide whether to accept alternative standards.

The City also reserves the right to reject any element of a transaction that, despite not beingspecifically prohibited, was not anticipated by these guidelines of such an element or businessterm othenruise creates unacceptable risks, excessive returns to the owner/developer, orotheruvise undermines the public purposes of the City's program.

lnsomuch as is reasonable, the City will update and clarify these guidelines over time to accountfor exceptions, waivers, or additional restrictions it imposes.

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APPENDIX 4UNIVERSAL DESIGN GUIDELINES

This portion of the manual outlines the City's policy on Universal Design and the minimum designcriteria for new affordable housing projects.

ln order to ensure the sustainability of the projects supported by CDBG and HOME funds, the Cityhas established guidelines in relation to Universal Design. ln addition, the City wants to ensure thatnewlyconstructed units are compatible with existing neighborhoods.

Universal DesiqnThis comprehensive housing policy creates a Universal Design construction requirement for allnew single-family homes, duplexes, and triplexes using financialassistance from the City.

The goal of "Universal Design" is to ensure that housing can accommodate the needs of people witha wide range of abilities, including children, aging populations and persons with disabilities.Consequently, all newconstruction housing projects using Cityof Dallas CDBG and/or HOME f undswill meet all the following criteria:

o At least one entrance shall have 36-inch door and be on an accessible route.o Allinteriordoorsshallbenolessthan32 incheswide;exceptforadoorthatprovides accessto

a closet of fewer than 15 square feet in area. Each hallway shall have a width of atleast36incheswideandshallbelevelandrampedorbeveledchangesateach doorthreshold.

o Allbathroomsshallhavethewallsreinforcedaroundthetoilet,bathtub,andshower for futureinstallation of grab bars.

o Each electrical panel, light switch or thermostat shall be mounted no higher than 48 inchesabove the floor. Each electrical plug or other receptacle shall be at least 15 inches from thefinishedfloor.

r An electrical panel located outside the dwelling unit must be between 18 inches and 42inches above the ground and served by an accessible route.

o All hardware installed to open/close doors and operate plumbing fixtures shall be leverhandles.

Universal Desiqn Waiver or Exterior Accessibilitv RequirementsThe Director of Sustainable Development or his designee may only grant modifications or anexemption to the requirements of the Ordinance regarding full compliance with the exterior path oftravel on an individualcase-by-case basis. The criteria for granting a modification or exemption areasfollows:

r Thelotsriseorfallssosteeplyfromthestreetthatamaximuml:l2slopecannot be achievedwithout extensive grading; and

. Novehicularaccess tothe backof the house willbe available by means of an alley.o Appeals of orders, decisions of determination made by the Director of Sustainable

Deve lopme nt naybe made to the Board of Adj ustments.

Universal Desiqn lmplementationo Clearly stamp or print "Universal Design" on plans submittedo Clearly ldentifydesign elements outlined in Ordinance.. Certify that the plans comply with the requirements of the Ordinance

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191864a Plan checking, construction inspections and enforcement shall be accomplished by the

Development Services Department in accordance with existing procedures.

Desiqn GuidelinesAll builders and developers of infill housing are strongly encouraged to incorporate the definingfeatures of a neighborhood into newly constructed infill houses. Those defining features of olderneighborhoods may include roof pitches, porches, materials, and window types. Developers mustcomply with any standards established by an existing neighborhood conservation district and/orapproved neighborhood plan. Additionally, all projects must advance the principles and policiescontained in the City of Dallas Complete Streets Design Manual. Site plans and building designsshould contribute towards safe and convenient pedestrian, bicycle, transit and automobile accessto the extent possible within the project site and the adjacent public right-of-way frontage.

For infill projects supported with CDBG and/or HOME funds, developers will be required todemonstratethattheneighborhoodassociationnearthelandtobedevelopedhasbeen consulted onthe design issues. Developers should obtain input and feedback from neighborhoodresidentsandwork with them to ensure that designs are compatible with existing housing and developmentpatterns.

In extreme cases where an agreement cannot be reached between the developer and localneighborhood groups, CDBG and/or HOM E f unding may be pulled f rom the project.

Specific design guidelines may be developed for certain City sponsored projects. Historic andneighborhoodconservation district requirements mustalso be metforallprojects.

For rehabilitation projects, builders and developers are strongly encouraged to retain the definingfeatures of older structures. This applies to multi-family and single-family projects.

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APPENDIX 5City of Dallas lncome Limits and Part 5 Requirements

Per 24 CFR Part 92.203(bX1), the City has elected to utilize lhe 24 CFR Part 5 definition fordetermining annualincomewhichiscommonlyreferredtoasthe"SectionSLow-lncomeLimit".Tobeeligiblefor HOM E or CDBG f unds, households must have annual (gross) incomes at or below 80% ofarea median income, adjusted by household size and determined annually by the U.S. Departmentof Housing and Urban Development (HUD).

The Technical Guide for Determining lncome and Allowances for the HOME Program should beutilized as a resource and the standard for the following determinations:

. Whose income tocount

. Types of income to countr Treatment of assetso lncome inclusions andexclusionso Verifying incomeo Comparing annual income to published income limitso Determininghouseholdsize. Source documentation. Timing of incomecertifications

The annual income limits are published by HUD each year at the webpage belowhttp://www.h uduser. gov/portal/datasets/illil 1 5/index. html

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1 91864APPENDIX 6Gommunitv Housinq Development Orqanization Policy, Procedure, and Standards

WHAT lS A COMMUNTTY HOUSTNG DEVELOPMENT ORGANTZATTON (CHDO)?A CHDO (pronounced cho'doe) is a private nonprofit, community-based service organization thathas significant capacity, and whose primary purpose is, to develop affordable housing for thecommunity it serves. Certified CHDOs receive special designation from the City of Dallas (City).The HOME lnvestment Partnership (HOME) Program definition of a CHDO is found al24 CFRParl92.2.

WHAT SPECIAL BENEFITS ARE AVAILABLE TO CHDOs?HOME regulations require that the City set aside 15o/o of its annual HOME allocation exclusivelyfor qualified, eligible CHDO projects. lf an organization becomes a certified CHDO, it is eligible totake advantage of the HOME funds set-aside just for CHDOs, as well as financial support for aportion of its operating expenses (Operating Assistance Grants) associated with CHDO projects.The City's CHDOs also have first right of purchase on land bank lots and as a nonprofit they areeligible to purchase HB1 10 lots.

REGULATORY REQUIREMENTS FOR CHDO CERTIFICATIONThe U.S. Department of Housing and Urban Development (HUD) has established standardcriteria for organizations to be eligible to become a certified CHDO:

1. Organized Under State/Local Law. A nonprofit organization must show evidence in itsArticles of lncorporation that it is organized under state or local law.

2. Nonprofit Status. The organization must be conditionally designated or have a taxexemption ruling from the lnternal Revenue Service (lRS) under Section 501(c) of thelnternal Revenue Code of 1986. A 501(c) certificate from the IRS must evidence theruling.

3. Purpose of Organization. Among its primary purposes, the organization must have theprovision of decent housing that is affordable to low- and moderate-income people. Thismust be evidenced by a statement in the organization's Articles of lncorporation and/orBylaws.

4. Board Structure. The board of directors must be organized to contain no more thanone-third representation from the public sector and a minimum of one-thirdrepresentation from the low-income community.

5. No For-Profit Control. The organization may not be controlled by, nor receive directionsfrom, individuals or entities seeking profit from or that will derive direct benefit from theorganization.

6. No lndividual Benefit. No part of a CHDO's net earnings (profits) may benefit anymembers, founders, contributors, or individuals. This requirement must also beevidenced in the organization's Articles of lncorporation.

7. Clearly Defined Service Area. The organization must have a clearly defined geographicservice area outlined in its Articles of lncorporation and/or Bylaws. CHDOs may serveindividual neighborhoods or large areas. However, while the organization may includean entire community in their service area (such as a city, town, village, county, or multi-county area), they may not include the entire state.

8. Low-lncome Advisory Process. A formal process must be developed andimplemented for low- income program beneficiaries and low-income residents of theorganization's service area to advise the organization in allof its decisions regarding the

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design, location, development and management of affordable housing projects.9. Capacity/Experience. The key staff and board of directors must have significant

experience and capacity to carry out CHDO-eligible, HOME-assisted projects in thecommunity where it intends to develop affordable housing (key staff and board ofdirectors have successfully completed HOME-funded, CHDO-eligible projects in thepasO.

l0,Community Service. A minimum of one year of relative experience serving thecommunity(ies) where it intends to develop affordable housing must be demonstrated.

11. Financial Accountability Standards. The organization must meet and adhere to thefinancial accountability standards as outlined in 2 CFR 200 Subpart D, "Standards forFinancial and Program Management."

CITY REQUIREMENTS FOR CHDO CERTIFICATIONln addition to the regulatory requirements, the City has established additional criteria for CHDOdesignation. To be eligible for CHDO designation, an organization must also:

1. Maintain a record of good standing with the Texas Secretary of State's office.2. Maintain a staffed, physical office location in the proposed service area that is open for

business and accessible by potential program applicants during generally-acceptedcustomary business hours.

3. Have established a minimum 3-year strategic business plan, which must include CHDO-related production and community involvement goals.

4. Maintain a history of no significant compliance findings on its City funded projects.

The City will accept applications from new CHDOs year-round; however, CHDO certifications willnot be provided until a project is identified for funding and prior to execution of a writtenagreement. Please note that the criteria noted above is not intended to be all-inclusive and theCity may require additional information prior to making a determination for CHDO designation.Meeting the above requirements does not guarantee that the organization will be granted CHDOdesignation. City reserves the right to deny or revoke CHDO designation based upon itsevaluation of the nonprofit organization's performance. Designated CHDOs will be evaluatedperiodically for production and other benchmarks as established by City.

ORGANIZATIONAL STR UCTU RE REQUIREM ENTS FOR CH DO CE RTIFICATIONThe HOME Program establishes requirements for the organizational structure of a CHDO toensure that the governing body of the organization is controlled by the community it serves.These requirements are designed to ensure that the CHDO is capable of decisions and actionsthat address the community's needs without undue influence from external agendas.

There are four specific requirements related to the organization's board, which must be evidencedin the organization's Articles of lncorporation and/or Bylaws. These are:

1. Low lncome Representation. At least one-third of the organization's board must berepresentatives of the low-income community served by the CHDO. There are threeways a board member can meet the definition of a low-income representative:

The person lives in a low-income neighborhood where 51o/o or more of the residentsare low-income. This person need not necessarily be low-income.

or

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The person is a low-income (below 80o/o a'rad median income) resident of thecommunity.

orThe person was elected by a low-income neighborhood organization to serve on theCHDO board. The organization must be composed primarily of residents of the low-income neighborhood and its primary purpose must be to serve the interests of theneighborhood residents. Such organizations might include block groups,neighborhood associations, and neighborhood watch groups.

The CHDO is required to certify the status of low-income representatives

2 Public Sector Limitations. No more than one-third of the organization's board may berepresentatives of the public sector, including elected public officials, appointees of apublic official, any employees of a local government or public school system, oremployees of City or the State of Texas. lf a person qualifies as a low-incomerepresentative and a public-sector representative, their role as a public-sectorrepresentative supersedes their residency or income status. Therefore, this personcounts toward the one-third public sector limitation.

3. Low-lncome Advisory Process. lnput from the low-income community is not met solelyby having low-income representation on the board. The CHDO must provide a formalprocess for low-income program beneficiaries to advise the CHDO on design, locationof sites, development and management of affordable housing. The process must bedescribed in writing in the Articles of lncorporation and/or Bylaws. Each projectundertaken by the CHDO should allow potential program beneficiaries to be involvedand provide input on the entire project from project concept, design and site location toproperty management. One way to accomplish this requirement is to develop a projectadvisory committee for each project or community where a HOME assisted project willbe developed. Proof of input from the low-income community will be required at theCHDO's annual recertification.

4. For-Profit Limitations. lf a CHDO is sponsored by a for-profit entity, the for-profit maynot appoint more than one-third of the board. The board members appointed by the for-profit may not appoint the remaining two-third of the board members.

EXPERTENCE, CAPACTTY AND ROLES (24 C.F.R.92.300-92.303)To be certified as a CHDO, the HOME Program requires organizations to demonstrate sufficientexperience, capacity, and financial accountability.

Experience & Capacity: A CHDO must certify to City that it has the capacity, demonstrated byhaving paid staff with demonstrated capacity to perform the specific role for which is it beingfunded. CHDO staff can be full-time or part-time and can be contract employees. The CHDOcannot count the experience of board members, donated staff, parent organization staff, orvolunteers to meet the capacity requirement. The CHDO can only count capacity brought to thetable by a consultant in the first year of participation. Afterward, the CHDO must demonstratecapacity based upon paid staff.

The CHDO must demonstrate experience and capacity relevant to the project and its role asowner, developer, or sponsor. lf the CHDO is the owner, its staff must have the capacity to act asthe owner (this may mean the ability to oversee development.) lf the CHDO is the developer orsponsor, its staff must have development experience on projects of similar scope or complexity.

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CHDOs must demonstrate a history of serving the community where the housing to be assistedwith HOME funds will be located. HUD requires that organizations show a history of serving thecommunity by providing:

o A statement that documents at least one year of experience serving the community.o For newly created organizations, provide a statement that the parent organization (if

applicable) has at least 1-year experience serving the community.

CHDOs must provide resumes and/or statements of key staff members that describe theirexperience of successfully completed projects similar to those proposed.

CHDO SERVICE AREAWhile the City does not limit the number of counties is a CHDO's service area, the very definitionof a CHDO is that it be community-based. Therefore, an organization proposing a large or regionalservice area must demonstrate that it is taking the appropriate steps to achieve the community-based component. Some of the ways this can be achieved is by having an active community(nonpublic) representative from each of the counties on the CHDO's board of directors;establishing local advisory councils to advise the CHDO board on topics relative to theorganization's activities; hosting "town hall" meetings in the proposed project areas, etc. the Citywill consider other methods suggested by the CHDO. CHDOs will be required to provide updateson how it is ensuring that it is active and visible in the communities included in its service area.

The City reserves the right to limit CHDOs going into a service area where an existing CHDO isalready providing service. Unless a CHDO is already approved to serve a particular territory, theCity will not approve CHDOs to serve overlapping territory.

CHDO RECERTIFICATIONTo ensure compliance with the HOME regulations, the recertification process will apply to CHDOswith active development projects including those under development and within the affordabilityperiod. Each CHDO will be required to submit specific information to City on an annual basis inconjunction with annual monitoring and compliance audits, including, but not limited to:

The response to questions, numbered exhibits, and attachments listed in the City'sCH DO certif ication appl icationAn updated 3-year business plan and a description of how the low-income advisoryprocess was implemented. lf no HOME funds were used within the reporting period, adetailed description of all other affordable housing initiatives undertaken will berequested.

Recertification will be required ANNUALLY WHEN THE CITY MONITORS THE CHDO FORCOMPLIANCE. The CHDO must recertify as to its continued qualifications as a CHDO and itscapacity to own, sponsor, or develop housing.

CHDOs that have not been allocatdd project funds from the HOME CHDO set-aside for 3consecutive years will be deemed inactive. At its discretion, the City may revoke the designationof inactive CHDOs based upon a review of other non-CHDO housing activities the organizationhas undertaken (if any), as well as other factors deemed appropriate by City.

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CHDO SET-ASIDEThe HOME requirements at 24 CFR Part 92.300 require City to set aside at least 15o/ool its annualHOME allocation for projects owned, developed or sponsored by CHDOs. A certified CHDO mustserve as the owner, developer or sponsor of a HOME-eligible project when using funds from the15% percent CHDO set-aside. A CHDO may serve in one of these roles or it may undertakeprojects in which it combines roles, such as being both an owner and developer. The CHDO mustbe certified for each type of activity it plans to undertake.

FINANCIAL ACCOUNTABILITYCHDOs must have financial accountability standards that conform to the requirements detailed in2 CFR 200 - Subpart D, "Standards for Financial and Program Management." This can beevidenced by:

o A notarized statement by the president or chief financial officer of the organization.o Certification from a certified public accountant.r Audit completed by CPA.. City reserves the right to request additional audited financial statements at any time.

ELIGIBLE AND INELIGIBLE USES OF HOME CHDO SET-ASIDE FUNDS

ELIGIBLE ACTIVITIES . OWNERS, SPONSORS, DEVELOPERSUsing the 15% set-aside, a CHDO acting as an owner, sponsor, or developer may undertake anyof the following activities:

o Acquisition and/or rehabilitation of rental property;o New construction of rental housing;o Acquisition, rehabilitation and resale of existing, vacant homebuyer property;o New construction of homebuyer property;o Direct financial assistance to purchasers of HOME-assisted housing developed by a

CHDO with HOME CHDO set-aside funds.

Please note that to be considered a CHDO-eligible project, CHDO set-aside HOME funds mustbe used during the construction or rehabilitation of the project.

INELIGIBLE CHDO ACTIVITIESUsing the 15% set-aside, a CHDO may not undertake any of the following activities:

o Rehabilitation of existing homeowners' properties;o Tenant-based rental assistance (TBRA); oro Down payment and/or closing cost assistance to purchasers of housing not developed

with HOME CHDO set-aside funds.

ELIGIBLE ACTIVITIES - SUBRECIPIENTSCHDOs may also act as subrecipients with non-set-aside funds by undertaking other HOME-eligible activities such as:

o Tenant-Based Rental Assistance (TBRA);o Owner-occupied rehabilitation of single-family dwellings; ando Down payment or closing cost assistance in the acquisition of single-family units.

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OPTIONAL OPERATING EXPENSESFrom time to time, funds may be available to provide general operating assistance to CHDOsreceiving CHDO set-aside funds for activities. When funds are available, certified CHDOs that areadministering an eligible project funded from the CHDO set-aside may be eligible to receive fundsto be used for operating expenses. The regulations allow the City to allocate no more than 5% ofits HOME allocation for CHDO operating expenses (Operating Assistance Grants). However, theCity reserves the right to further restrict the amount of funds an entity may receive for CHDOoperating funds. This allocation does not count toward the required 15% CHDO set-aside fundsthat are to be used by CHDOs for projects.

The amount of the optional Operating Assistance Grants awarded will be based on, but not limitedto, the following factors:

o The total amount of HOME funds City has available to allocate for reimbursable CHDOoperating expenses;

o The anticipated completion date and size of your current CHDO set-aside project(s); ando The CHDO's past performance as a CHDO developer.o The CHDO's capacity to complete the prolect in a timely manner.o The ability of the CHDO to retain CHDO proceeds.

The City will allocate Operating Assistance Grants on annually. Operating Assistance Grants willbe provided on a fiscal year basis (October 1 - September 30) provided funds are available andthe CHDO has demonstrated acceptable performance.

Although the disbursement of CHDO operating funds is not tied directly to the drawdownof the CHDO project fundsn the City reserves the right to delay disbursement of operatingfunds if it is evident that the CHDO project is experiencing excessive detays.

City reserves the right to reduce the amount of, or not award, operating funds based upon itsevaluation of the CHDO's production and overall performance.

Eligible operating expenses for which CHDOs may use operating funds include:

o Salaries, wages, benefits, and other employee compensationo Employee education, training and travelo Rent and utilitieso Communication costso Taxes and insuranceo Equipment, materials and supplies

Because the purpose of providing CHDO operating support is to nurture successful CHDOs andensure their continued growth and success, the City will periodically evaluate the performance ofany CHDO wishing to receive CHDO operating funds.

CHDO PROCUREMENTAs noted in HUD CPD Notice 97-11, CHDO organizations are not subject to the requirements of2 CFR, Part 200 in regard to the procurement of goods and services. However, the City strongly

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encourages organizations to ensure that costs are reasonable and equitable. This exemption isonly applicable to procurement associated with CHDO-eligible projects; CHDOs must still followappropriate procurement procedures compliant with Part 200 for its non-CHDO projects. City mayrequest a copy of the CHDO's procurement policy for any non-CHDO project funding proposals.

EFFECTIVE PERIOD OF CHDO CERTIFICATIONTo maintain its CHDO certification, the CHDO must submit at least 30 days prior to its annualcompliance and monitoring audit a copy of the most recent audit financial statements along withall required attachments listed in the City's CHDO Certification Application, which is attached tothis manual as Exhibit "A" - City CHDO Application. lf the CHDO fails to submit therecertification packet, the CHDO may no longer qualify as a CHDO. Prior to awarding any CityCHDO funds, the CHDO must recertify that no changes have occurred within the agency thatwould disqualify the entity as a CHDO for the specific type of activity being undertaken.

HOW TO APPLY FOR CHDO CERTIFICATIONComplete the City's CHDO Certification Application including all requested attachments,documentation, and forms. The applicant has 30 days to respond to any request for additionalinformation. lf information is not received within 30 days, the CHDO certification application willbe denied.

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191864APPENDIX 7Recapture/Resale Requirements for Homebuyer Activities

To ensure that HOME investments yield affordable housing over the long term, HOME regulationsimposeoccupancyrequirementsoverthelengthof anaffordabilityperiod.lf a house purchased withHOME funds is sold during the affordability period, recapture or resale provisions as per 24 CFR92.254 shall apply to ensure the continued provision of affordable homeownership.

DefinitionsAffordability Period: Occupancy restrictions for varying lengths of time for those homeownersassisted with HUD HOME funds. The affordability period affects the terms of the resale/recaptureof the property if sold during the affordability period.

Direct Homebuyer Subsidv: A direct subsidy consists of any financial assistance that reduces thepurchase price from fair market value to an affordable price, or otherwise directly subsidizedthepurchase(e.g.,downpaymentorclosingcostassistance,subordinatefinancing, etc.).

Development subsidy: A development subsidy is the difference between the cost to develophousing and the market price. For example, the PJ might provide a $50,000 construction loan to adeveloper.Theappraisedvalueafterconstructionwillbe$45,000 because of neighborhood and themarket conditions. The $5,000 difference between the $45,000 sale price and $50,000 constructionloan is not repaid to the PJ and represents a development subsidy provided to the developer. Whilethe subsidy does not go directlyto the homebuyer, it helps make developmentof an affordable homefeasible.

Net Proceeds: The sales price minus loan repayment (other than HOME funds) andclosing costs.

HOME subsidy/unit Minimum Period of Affordability in YearsUnder $'15,000 5

$15,000 to $40,000 10

Over $40,000 15

Direct Homebuyer Subsidy (DHS) DHS + Development Subsidy Development SubsidyRecapture provisions shall apply Recapture provisions shall

applyResale provisions shall apply

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Recapture Req u irements

Pursuant to HOME regulations at24 CFR92.254(a)(5) each HOME-funded homebuyer unit mustbe subject to either resale or recapture requirements during the affordability period. The City ofDallas exclusively uses the recapture provisions as defined herein and does not intend to useresale restrictions.

The City of Dallas provides HOME-funded direct buyer assistance to income eligible buyers basedon need as dictated by the City of Dallas Homebuyer Assistance Program UnderwritingGuidelines.

The level of HOME assistance provided to a buyer is based on an evaluation of the buyer'sindividual need taking into account their specific income, debts, etc. according to the City'sunderwriting policies for homebuyer assistance. Depending on the level of homebuyer assistanceprovided, the affordability period may be five (5) years (less than $15,000 in direct assistance),ten (10) years ($1S,OOO or more but less than $40,000 in direct assistance), or fifteen (15) years($+O,OOO or more in direct assistance). Based on the City's program design, most projects triggera 5- or 1O-year affordability period.

All buyers sign a HOME written agreement with the City outlining the affordability period andrecapture provisions. HOME assistance is provided in the form of a deferred loan secured by asecond-position deed of trust which is due and payable upon sale or transfer of title. ln the eventbuyers remain in the unit beyond the end of the affordability period, the HOME loan remainsoutstanding until sale or transfer of title while the term of the HOME written agreement expires.

Any sale or transfer of title during the affordability period results in recapture by the City of thelesser of the:o Entire amount of direct HOME assistance originally provided to the buyer (less any voluntary

prepayments previously made); oro Net proceeds of sale (sales price minus senior secured debt minus reasonable seller's closing

costs).

When the net proceeds are inadequate to fully repay the City's HOME loan, the City accepts thenet proceed as full and final payoff of the note. The City reserves the right to determine that thesales price reflects an arms-length transaction at fair market value. Receipts received as a resultof a sale within the affordability period are recorded as "recaptured funds." When net salesproceeds exceed the HOME assistance, buyers retain all remaining net proceeds after repayingthe HOME loan balance.

After the expiration of the affordability period, any sale or transfer requires the HOME loan balancebe repaid, and the City similarly limits the payoff to the net proceeds of sale. Receipts collectedafter the affordability period has expired are recorded as "program income." Net proceeds inexcess of the City's HOME loan balance are retained by the original homebuyer.

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Resale Requirements

The City of Dallas shall require that Resale provisions be used in the event that only aDevelopment Subsidv is used to make the home affordable (i.e. funding construction to thedeveloper). ln a project where both Development and Direct subsidies are provided, recaptureprovisions apply.

Resale provisions require the homeowner to sell to another low-income homebuyer. The resalerequirement must ensure that the price at resale provides the original HOME-assisted owner afair return on investment and ensure that the housing will remain affordable to a reasonable rangeof low-income homebuyers as defined below:

Affordable to range of low-income homebuyers (As it relates to the Resale Provision only): Thatwhich is affordable to a family earning 80% AMI and below and that who do not pay any morethan 30% their gross income for PlTl (Principle, lnterest, Tax, and lnsurance).

Fair Return on lnvestment (As it relates to the Resale Provision only): A Homeowner can sell thehome during the affordability period according to the following chart:

Homeownership projects undertaken using the resale provision shall use deed restrictions,covenants runningwith land, orothersimilarmechanisms per92.254(aXsXi)(A) to ensurethe resalerequirements. The period of affordability specified in the mortgage will be the minimum periodfortheprojectasspecifiedabove.Theperiodof affordabilityisbasedonthetotalamountof HOMEfundsinvested in the housing.

Either recapture or resale provisions must be detailed and outlined in accordance with 24 CFR inmarketing brochures, written agreements and all legal documents with homebuyer. Eitherrecapture or resale may be used within a project, not both. Combining provisions to create"hybrids" is not allowed.

Years llower Range lMax LimitA Homeowner can sell the

home during the affordabilityperiod for no more than 15%

over DCAD's most recentappraisalvalue

urrent (as of date of sale)

le Home Priceassetin the City of DallasngPolicy

Year 1-5 of Affordability

Period

Year 6-15 of Affordability

PeriodlCurrent (as of date of sale)

lAffordable Home Price as set

fforth in the City of Dallas

lHousingPolicy

No Cap on appreciation rate

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APPENDIX 8City o'[pql las Aff irmative Fai r Housi ng Marketi ng Pol icy

The Affirmative Fair Housing Marketing (AFHM) Plan is a marketing strategy or approachdesigned to attract renters and buyers that would be least likely to apply to assisted multi- familyor single-family developments. The City of Dallas requires that all recipients and sub-recipients ofHOME, CDBG or NSP funds, for all projects resulting in five (5) or more assisted housing units,implement affirmative marking approaches as part of the overall marketing strategy. To marketaffirmatively means that a good faith effort is made to attract to a project those minority or majoritygroups who are least likely to apply or are underrepresented in a neighborhood or community.Good faith efforts are recorded activities and documented outreach to those individuals identifiedas least likely to apply. Affirmative marketing requirements apply to all housing programs,including, but not limited to Tenant- Based Rental Assistance and Down Payment AssistancePrograms.

The City of Dallas is committed to affirmatively market to such groups and requires that recipientsof HOME/CDBG funds to submit an AFHM Plan using HUD Form 935.28 for single- familydevelopments and HUD Form 935.2A for multi-family developments, priorto expending anyfundson a project.

ln developing an Affirmative Marketing Plan, the recipient/managing agent shall abide by thefollowing:

Regulations

HOME: The recipienVmanaging agent shall adopt the affirmative marketing procedures andrequirements as specified in the HOME Final Rule 92.351 for all projects resulting in five (5) ormore HOME-assisted housing units.

CDBG: The Housing and Community Development Act ol 1974, as amended, requires from eachfederal grantee, through the Consolidated Plan certify the following:

o Examine and attempt to alleviate housing discrimination with their jurisdiction;o Promote fair housing choice for all persons;o Provide opportunities for all persons to reside in any given housing development,

regardless of race, color, religion, sex, disability, familial status, or national origin;r Promote housing that is accessible to and usable by persons with disabilities;o And comply with non-discrimination requirements of the Fair Housing Act.

Policy on Nondiscrimination and Accessibility

The recipienVmanaging agent shall not discriminate against any individual or family because ofrace, color, national origin, religion, gender, disability, familial status, sexual orientation, genderidentity or expression or source of income (disability, child support, spousal support or veteran'sincome or voucher). Reasonable accommodations will be offered to all disabled persons whorequest accommodations due to disability at any time during the application, resident selectionand rent up process.

Trainingr The recipienVmanaging agent shall provide property management staff with all relevant

regulations and Fair Housing provisions. All property management staff shall be required

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to follow the procedures and policies adopted by the recipienVmanaging agent. ln theevent that property management staff requires fair housing technical assistance, staff isto call the City of Dallas Office of Fair Housing and Human Rights 214-670-FAIR(32471.Regular training programs shall include marketing, outreach, data collection, reporting,and record keeping. Property management staff shall annually receive instructionregarding fair housing laws and the recipienUmanaging agent's Affirmative MarketingPlan.

Marketing and Outreach. All advertising shall display the Equal Housing Opportunity logo or the phrase "Equal

Housing Opportunity" and the accessibility logo when appropriate, as shown below:

EQUAL HOUSINGOPPORTUNITY

Consistent with resident population the development is designed to serve, the marketingof the project will ensure equal access to appropriate size units for all persons in anycategory protected by federal, state, and local laws governing discrimination. There willbe no local residency requirements nor will preference be given to local residents for theproject. Special marketing outreach consideration shall be given to the followingtraditionally u nderserved populations:o African-Americanso Native Americanso Hispanicso Asians and Pacific lslanderso Disabled Persons

a

a

Marketing shall include the use of newspapers of general circulation in Dallas, TherecipienVmanaging agent will place notices in newspapers, specialized publications, andnewsletters to reach potential residents. Applications, notices and all publications willinclude a Fair Housing and Equal Opportunity Logo, and the Accessibility Logo.

The recipients/managing agent will contact local civic and community organizationsrepresentative of the ethnic and cultural diversity of the area in order to disseminateinformation about the development. Groups representing disabled and elderly individualswill be contacted. Where necessary, recipient/managing agent will publish its marketingmaterials in multiple languages and alternate formats as requested in order to better reachpotential recipients and sub-recipients in the area with language limitations.

Race and Ethnic Data Collection and ReportingAn applicant shall be given an application package containing the following: Application,lncome

o

a

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Requirements and form HUD-27061-H "Race and Ethnic Data Reporting Form." TherecipienVmanaging agent is required to offer each household member the opportunity to completethe form. Parents or guardians are to completetheformforchildrenundertheageof l8.Completeddocumentsforthe entirehouseholdshallbestapledtogetherandplaceinthehousehold'sfile.

Compliance Assessmente The recipienVmanaging agent will review the Affirmative Marketing Plan every year and

update as needed to ensure compliance. The advertising sources will be included in thereviewto determine if past sources should be changed or expanded.

The recipienVmanaging agent will annually assess the success of affirmative marketingactions for the project. lf the demographic data of the residents vary significantly from thejurisdiction's population data, advertising efforts and outreach will be targeted tounderrepresentedgroupsinanattempttobalancetheresidents with the demographics of thejurisdiction. The recipienVmanaging agent shall submit any changes to the plan to the FairHousing Office.

o

Record Keepingo The assigned recipienVmanaging agent shall establish and maintain an Affirmative

Marketing file to hold advertisements, flyers, and other public information documents todemonstrate that the appropriate logo and language have been used. Additionally, staffshall keep records of its activities in implementing the affirmative marketing plan, includingother community outreach efforts and its annual analysis.

e RecipienVmanaging shall keep up-to-date records based on census data, applications,and surveys about community residents, recipients and sub-recipients, residents of theproject, and records about tenant selection or rejection.

o The recipienVmanaging agent shall provide City staff provide City staff access to anypertinent books, documents, papers or other records of their properties, as necessary, fordetermining compliance with civil rights and nondiscrimination requirements.

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191864APPENDIX 9Residential Anti-Displacement and Relocation Assistance Plan (RARAP)

This ResidentialAnti-Displacement and Relocation Assistance Plan (RARAP) is prepared by theCity of Dallas Housing & Neighborhood Revitalization Department (City) in accordance with theHousing and Community Development Act of 1974, Section 104(d) as amended and HUDregulations at 24 CFR 42.325 and is applicable to CDBG, CDBG-R, Section 108 Loan GuaranteeProgram, NSP and/or HOME-assisted projects.

Plan to Minimize Displacementof Low/Mod-lncome Families as a Resultof Any HUDAssistedActivities

Consistent with the goals and objectives of activities assisted under the Act, the City willtake thefollowingstepstominimizethedirectand indirectdisplacementof personsfromtheir homes:

. Coordinate code enforcement with rehabilitation and housing assistance programs.

. Supportthe Redevelopment and Stabilization Target Areas through this policyo Ensurethestagingof rehabilitationof apartmentunitstoallowtenantstoremain inthe

building/complexduringand afterthe rehabilitation, workingwith emptyunitsfirst.o Ensure for the arrangement of facilities to house persons who must be relocated

temporarily during rehabilitation.. ldentify and mitigate displacement resulting from intensive public investment in

neighborhoods.. Provide reasonable protections for tenants faced with conversion to a condominium or

cooperative.o Where feasible, give priority to rehabilitation of housing, as opposed to demolition, to avoid

displacement.o lf feasible,allowfordemolitionorconversionof onlydwellingunitsthatarenot occupiedor

vacant occupied dwelling units (especially those units which are "lower- income dwellingunits" (as defined in 24 CFR 42.305).

. Target only those properties deemed essential to the need or success of the project.

Relocation Assistance to Displaced PersonsThe City will ensure relocation assistance for lower-income tenants who, in connection with anactivity assisted under the above-mentioned Programs, move permanently or move personalpropertyfrom real property as a direct result of the demolition of any swelling unitorthe conversionof lower-incomedwellingunitinaccordancewiththerequirementsof24CFR 42.350.

A displaced person who is not a lower-income tenant, shall be provided relocation assistance inaccordancewiththe Uniform RelocationAssistanceand RealPropertyAcquisition PoliciesAct of1970m Section 104(d)asamended, and implementing regulationsat4gCFR Part24.

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191864One-for-One Replacement of Lower-lncome Dwelling UnitsThe City will ensure replacement of all occupied and vacant occupied lower-income dwelling unitsdemolishedorconvertedtouseotherthanlower-incomehousinginconnectionwitha projectassisted with funds provided under the above-mentioned programs in accordance with 24 CFR42.375.

BeforeenteringintoacontractcommittingtheCitytoprovidefundsforaprojectthatwill directlyresultindemolitionorconversionof lower-incomedwellingunits,theCitywillensure publication ofsuchprojectinanewspaperof generalcirculationandsubmittoHUDthe following information inwriting:

o A description of the proposed assisted project;o Theaddress,numberof bedrooms,andlocationonamapof lower-incomedwelling units

thatwillbedemolished orconvertedtoa use otherthan as lower-income dwelling units as aresult of assisted project;

o Atimescheduleforthecommencementandcompletionofthedemolitionor conversions;o To the extent known, the address, number of lower-income dwelling units by size (number

of bedrooms)andlocationonamapofthereplacementlower-income housingthathasbeenorwill be provided. NOTE: Seealso24CFR420.75(d).

o The source of funding and a time schedule for the provision of the replacement dwellingunits;

o The basis for concluding that each replacement dwelling unit will remain a lower- incomedwel li ng unitforat least 1 0 years f rom the date of initial occupancy; and

r lnformation demonstrating that any proposed replacement of lowerOincome dwellingunits with smaller dwelling units (e.9., a 2-bedroom unit with two 1- bedroom units), orany proposed replacement of efficiency or single-room occupancy (SRO) units with unitsof a different size, is appropriate and consistent with the housing needs and prioritiesidentified in the HUD-approved Consolidated Plan and24 CFR 42.375(b).

Totheextentthatthespecifiedlocationofthereplacementdwellingunitsandotherdatain items4throughTarenotavailableatthetimeofthegeneralsubmission,thegenerallocation ofsuchdwellingunitswillbeidentifiedonamapandtheCitywillensurethatthedisclosure andsubmissionrequi rements are completed as soon as the specific data is avai lable.

Replacement not required Based on Unit AvailableUnder24CFR42.375(d),theCitymaysubmitarequesttoHUDforadeterminationthatthe one-for-one replacement requirement does not apply based on objective data that there is an adequatesupplyofvacantlower-incomedwellingunitsinstandardconditionavailableona non-discriminatorybasis within the area.

Responsible EntityThe City is responsible for tracking the replacement of lower income dwelling units and ensuringthattheyareprovidedwithintherequiredperiod.ThisCitywillalsoensurethat relocationpaymentsand other relocation assistance are provided to any lower-income person displacedbythedemolitionof anydwellingunitortheconversionof lower-incomedwelling units to anotheruse.

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APPENDIX 1O

Other Federal Requirements

Other FederalRequirements

Apply to Owner OccupiedRehabilitation?

Apply to HomebuyerPrograms?

Applies to RentalHousing Programs?

Non-Discrimination and Equal Access BulesFair HousingandEqual Opportunity

Yes. Must affirmativelyfurther Fair Housing

Yes Yes.

Affirmative Marketing Yes. Yes, for all projects offiveormoreHOME-assisted units.

Yes; for projectscontaining five or moreHome-assisted units.

AccessibilityDisabled Persons

for Accessibility features must bepart of rehabilitation, if needecby owner/occupant and theoverall unit is brought up tcthe PJ's property standard,(Note: Accessibility improve-ments are eligible costs.)

Yes. Yes.

Employment and Contracting RulesEqual OpportunityEmployment

Yes. Yes Yes.

Section 3 EconomicOpportunity

Yes, if amount ofassistance exceeds$200,000 or contractorsubcontract exceeds

$100,000.

Yes, if amount ofassistance exceeds$200,000 or contractorsubcontract exceeds

$100,000.

MinorityAlVomenBusiness Enterprises

No Yes Yes.

Davis-Bacon & otherLabor

No. Yes, if constructioncontract includes 12ormore unitsthatareHOME-assisted

Yes, if constructioncontract includes 12 ormore units that areHOME-assisted

Conflict of interest Yes Yes. Yes.Excluded Parties (e.9.,DebarredContractors)

Yes. Yes Yes

Other Federal RequirementsEnvironmentalReviews

Yes. Yes Yes

Flood lnsurance Yes for PJs that arecities/counties. No for Stateprograms.

Yes if city or county.No if state program

Yes for PJs that arecities/counties. No forState PJs.

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Site and NeighborhoodStandards

No. No. Yes; for rental newconstruction only

Lead-Based Paint Yes for pre-1978 units Yes for pre-'l978 units. Yes for rehabilitation ofpre-1978 units.Applies to HOME andnon-HOME assistedunits.Requirements differdepending on whetherrehabilitation work isperformed.

Relocation Yes Yes Yes.

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191864APPENDIX 11

Lead-Based Paint Requirements

This portion of the manual outlines the requirements in relation to Lead-Based Paint.

The U.S. Department of Housing and Urban Development recently adopted new regulations inrelationtothetreatmentofLeadBasedPaintinpropertiesbuiltbeforel9TSthatareassisted with HUDfunding. The requirements are outlined below based on the activity undertaken. To obtain a copyof the rules from HUD, go to the HUD website at: www.hug.gov/lead and download theregulation.

The section does not outline the City programs that are available to provide financial assistance inrelationtoleadabatement. Pleasenote,howeverthatanyfinancialassistanceprovidedby theCitytoaddressleadbasedpaintwillbeintheformof aGRANTtothehomeownerto developer.

Down-payment Assistance Programs:The following are HUD's requirements See 24 CFR part 35 (subpart K)

o Distribute Lead Hazard lnformation Pamphlet and Disclosure to buyers of homes built priorto 1978.

. Perform Visual Assessment of all painted surfaces.o lf Visual Assessment reveals deteriorated paint, action must be taken to stabilize each

deteriorated paint surface.o At this point, one will have to assume every component has lead since the Visual

Assessment does not determine where lead is present. Safe work practices must beused by trained worker in this field. Paint stabilization works will on non-frictionsurfaces such as walls (interior/exterior). When dealing with friction points such aswindows and doors, abatement procedures (removal, replacement, enclosure) arerecommended.

o After paint stabilizalion, clearance must be performed by a certified Risk Assessor or LeadI nspector. H U D has establ ished lead levels that meet clearance req ui rements.

o Notify the homebuyer within 15 days of results of clearance exam.

At the Visual Assessment Stage, the homebuyer may opt for a lead test. This will reveal the levelsof lead present in the home. A lead inspection will not tell you the risk involved, but only wherethe leas is located. This is when a buyer may request a Risk Assessment to outline the necessaryLead Hazard Reduction methods needed to insure a lead safe residence.

Following are some options (NOT REQUIREMENTS) to consider in relation to your programdesign for down payment assistance programs:

r lf the visual assessment reveals defective paint in which stabilization and clearance isrequired then this cost can be funded by the nonprofit or the homebuyer or seller.

r lf visual assessment shows no deterioration of a painted surface, the homebuyer can signa waiver stating that they are aware of the potential presence of lead paint and they choosenot to address it.

. A qualified consultant should advise on any lead inspection, lead hazard screen or riskassessments.

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191854For Rehabilitation Programs (Owner-Occupied, Homebuyer, and Rental Property RehabilitationProgramsand Historic Preservation Residential Programs):

See 24 CFR Part 35 (subpart J)

lf you are implementing a rehabilitation program, HUD's requirements are a bitmore stringent in relation to lead based paint. The following describes HUD'srequirements:

For HUD funded rehabilitation activities, lead hazard evaluation and reductionactivities must be carried out for all projects constructed before 1978.

Inallcase, notification mustbe madetothehomeowneribuyerintheformof the HUDLead Hazard lnformation Pamphlet and Disclosure or an acceptable alternativepamphlet.

The required evaluation and reduction activity is dependent upon the amount olHUD funding used for theproject.

For cases where less than or eoual to $5.000 will be soent on therehabilitation: Testing: Paint Testing of surfaces to be disturbed by therehabilitation activities must occur.

Lead Hazard Reduction: Surfaces, which are disturbed during rehabilitation,must be re paired. Safe work practices must be used. After therehabilitation activities are completed, clearance must be performed by acertified professionalto ensure that units are safe.

For cases where $5.001 to $25.000 will be soent on the rehabilitation:Testing: Paint testing of surfaces to be disturbed by rehabilitation mustoccur. ln addition, a riskassessment must be performed.

Lead Hazard Beduction: lnterim controls must be used. This means that thefriction and impact surfaces would be addressed. lnterim controls includepaintstabilizationand cleaning. Safe work practices must be used. Afterthe rehabilitation activities are completed, clearance must be performed bya certified professional to ensure that units are safe.

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191854For cases where more than $25.000 will be spent on the rehabilitation:Testing: Paint testing of surfaces to be disturbed by rehabilitation mustoccur. ln addition, a riskassessment must be performed.

Lead Hazard Reduction: abatement of hazards is the required approach.Abatement involves permanently removing lead based hazards, oftenthrough paint and component removal, replacement, encapsulation andenclosure. lnterim controlsand paintstabilization may be used on the home's exterior if it is not involved in therehabilitation. Safe work practices must be used. After the lead hazardreduction activities are completed, clearance must be performed by acertified professionalto ensure that units are safe.

Calculating the level of rehabilitation assistance:When calculating how much HUD funding will be used on a rehabilitation project, the following costsare counted: soft costs, administrative costs, relocation costs, environmental reviews, acquisitionof property, and lead hazard evaluation and reduction costs.

Lead-Based Paint RequirementsFor HUD funded rehabilitation activities, lead hazard evaluation and reduction activities must becarried out for all projects constructed before 1978.

Less than or equal to $5,000 spent on the rehabilitation:Projects where the level of rehabilitation assistance is less than or equal to $5,000 per unit mustmeet the following requirements. All work must be conducted using lead safe work practices andworkers/contractors must be trained in lead safe work practices. lt is presumed that paintedsurfaces being worked on contain lead-based paint. All disturbed paint must be repaired.Clearance is required by a State of Texas Certified Risk Assessor or lnspector if paint is disturbed.Safe work practices are NOT required when lead hazard reduction activities do not disturb (DeMinimis Levels) painted surfaces that total more than 20 sq ft on exterior surfaces, 2 sq ft in anyone interior room, or space or 10o/o of the total surface on an interior or exterior type of component.

ln addition, the following notices must be provided to owners:. Lead Hazard lnformation pamphletr Notice of Presumption and. The Notice of Lead Hazard Reduction

Where $5,001 to $25,000 spent on the rehabilitation:

A risk assessment is required to identify lead hazards and identified hazards must be addressedby interim controls. A risk assessment must be conducted by a qualified professional prior torehabilitation to find lead-based paint hazards in assisted units, in common areas that servicethose units, and on exterior surfaces. The risk assessment must include paint testing of anysurfaces to be disturbed by the rehabilitation. lf the risk assessment identifies lead-based painthazards, interim controls must be implemented to address lead-based paint hazards. lnterimcontrols must be performed by qualified professionals using safe work practices. Clearance,conducted by a State of Texas Certified Risk Assessor or lnspector, is required when lead hazardreduction activities are complete.

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ln addition, the following notices must be provided to owners. Lead Hazard lnformation pamphleto Notice of Presumption ando The Notice of Lead Hazard Reduction

Where more than $25,000 will be spent on the rehabilitation

A risk assessment is required to identify hazards and any identified hazards must be abated by aqualified professional. A risk assessment must be conducted prior to rehabilitation to find lead-based paint hazards in assisted units, in common areas that service those units, and on exteriorsurfaces. The risk assessment must include paint testing of any surfaces to be disturbed by therehabilitation.

To address hazards identified:r Abatement must be conducted to reduce all identified lead-based paint hazards except

those described below. Abatement must be conducted by a certified abatement contractor.

lf lead-based paint hazards are detected during the risk assessment on the exterior surfaces thatare not to be disturbed by rehabilitation, interim controls may be completed instead of abatementto reduce these hazards.

o Clearance is required when lead hazard reduction activities are complete.

ln addition, the following notices must be provided to owners:. Lead Hazard lnformation pamphleto Notice of Presumption and. The Notice of Lead Hazard Reduction

Approach to LeadHazard Evaluation andReduction

Do no harm ldentify and control leadhazards

ldentify and abate leadhazards

Notification Yes Yes Yes

Lead Hazard Evaluation Paint Testing Paint Testing and RiskAssessment

Paint Testing and RiskAssessment

Lead Hazard Reduction Repair surfacesdisturbed duringrehabilitation

lnterim Controls Abatement (lnterimcontrols may be used onexterior surfaces notdisturbed byrehabilitation

Er,trrm FEFlirtrilEfirrtt trrop

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APPENDIX 12Environmental Review Policy, Procedures, and Standards

For every project, an Environmental Review must be completed in accordance with 24CFR Part 58priortoexecutinganagreementwithasub-recipient,developerorCHDO. TheCityhas developedthe "Environmental Review Policy, Procedures, and Standards" document to outline theprocessand requirementsof completingan Environmental Review.

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APPENDIX 13SECTION 3

All projects receiving an award of HOME funds must comply with HUD's Section 3 requirements.The purpose of Section 3 is to ensure that employment, training, contracting, and other economicopportunities generated by financial assistance from HUD shall, to the greatest extent feasible,and consistent with existing federal, state, and local laws and regulations, be directed to low- andvery low-income persons, particularly those who are recipients of government assistance forhousing, and to business concerns that provide economic opportunities to low- and very low-income persons. Recipients of an award of HOME funds will be required to complete Section 3compliance forms prior to execution of a loan agreement. Applicants requesting HOME fundsmust provide a written strategy demonstrating understanding of the Section 3 requirements anddetailing how they will ensure that, when employment or contracting opportunities are generatedbecause the project or activity necessitates the employment of additional persons or the award ofcontracts for work, preference shall be given to low- and very low-income persons or businessconcerns in the neighborhood. Neighborhood is defined in the HOME regulations (24 CFR Part92, Subpart A) as "a geographic location designated in comprehensive plans, ordinances, or otherlocal documents as a neighborhood, village, or similar geographical designation that is within theboundary but does not encompass the entire area of a unit of general local government."

Developers must obtain the City's approval of the Section 3 plan prior to the construction start ofthe project.

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191864APPENDIX 14MinorityMomen Business Enterprise

Developers must maintain an MA/VBE plan that demonstrates marketing and solicitation ofMATVBE businesses and contractors for the construction of the project.

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19 18 64APPENDIX 15Regulatory References

You may be interested in reading the actual regulations published by the U.S. Department ofHousing and Urban Development for CDBG and HOME and the applicable federal requirements.A copy of the regulations may be obtained by contacting the Department of Housing andNeighborhood Revitalization or downloading the information from the HUD website atwww.hud.oov.

The regulations for CDBG are located at24 CFR Part 570: Part 570 - Community DevelopmentBlock Grants

Section570.1

570.2

570.3

570.4

570.5

Subpart A - General ProvisionsTitlePurpose and PrimaryObjectiveRemovedDefinitionsAllocations of Funds

Waivers

Subpart G - Eligible ActivitiesTitleGeneral PoliciesBasic eligible activitiesEligible rehabilitation and preservation activitiesSpecial economic developmentactivitiesSpecial activities by Community- Based Development Organizations (CBDO's)Eligible planning, urban environmental design and policy-planning-management- capacity building activitiesProgram administration costslneligible activitiesCriteria for national objectives

Guidelines for evaluating and selecting economic development projects

TitIe SUBPART A. GENERALOverviewDefinitions

Waivers and Suspensions of Requirements for Disaster Areas

The regulations for HOME are located al24CFRParl92 Home lnvestment PartnershipsProgram

Section570.200

570.201

570.202

570.203

570.204570.205

570.206

570.207

570.208

570.209

Section92.r92.2

92.4

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SUBPART B - ALLOCATIONS FORMULA92.50 Formula Allocations92.60 Allocation Amounts for lnsular Areas92.61, Program Description92.62 Reviewof Program Description and Certifications92.63 Amendments to ProgramDescription92.64 Applicability of Requirements to lnsular Areas92.65 Funding Sanctions92.66 Reallocations

SUBPART C - CONSORTIA; DESIGNATION AND REVOCATION OF DESIGNATIONAS A PARTICIPATING JURISDICTION

92.101 Consortia92J02 Participation Threshold Amount92.103 Notification of lntent to Participate92.104 Submission of a Consolidated Plan

92.105 Designation as a Participating Jurisdiction92.106 Continuous Designation as a Participating Jurisdiction92.107 Revocation of Designation as a Participating Jurisdiction

SUBPART D - SUBMISSION REQUIREMENTS92.150 Submission Requirements

SUBPART E - PROGRAM REQUIREMENTS

92.20092.20192.20292.20392.204

92.20592.20692.20792.208

92.209

Private- Public Partnersh ip

Distribution of AssistanceSite and Neighborhood Standardslncome DeterminationsApplicabilityof Requirementsto Entitiesthat Receive a Reallocation of HOMEFunds, other than Participating JurisdictionsEligible Activities: GeneralEligible Project CostsEligible Administrative and Planning CostsEligible Community Housing Development Organization (CHDO) OperatingExpense and Capacity Building CostsTenant-Based Rental Assistance: Eligible Costs and Requirements

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191664Lead Based Paint RegulationsDEPARTMENT OF HOUSING AND URBAN DEVELOPMENT24 CFR Parts 35, 91 , 92, 200,203,206,280,291, 51 1 , 570, 572, 573, 574, 576, 582,583, 585,761, 881 ,882,883, 886, 891, 901, 906, 941, 965, 968, 670, 982, 983, 1000, 1003, and 1005Requirements for Notification, Evaluation and Reduction of Lead-Based PaintHazardsinFederallyOwned ResidentialPropertyand Housing Receiving Federal Assistance.

AGENCY: Office of the Secretary - Office of Lead Hazard Control, HUD.

AGTION: Final rule.

SUMMARY: The purpose of this rule is to ensure that housing receiving Federalassistance and federally owned housing that is to be sold does not pose lead-based paint hazardsto young children. lt implements sections 1012 and 1013 of the Residential Lead-Based PaintHazard Reduction Act of 1992, which is Title X of the Housing and Community Development Actof 1992.The requirements of this rule are based on the practical experience of cities, states and otherswho have been controlling lead-based paint hazards in low-income privately-owned housing andpublic housing through HUD assistance. lt also reflects the results of new scientific andtechnological research and innovation on the sources, effects, costs, and methods of evaluatingand controlling lead hazards. With today's action, HUD's lead-based paint requirements for allFederal programs are now consolidated in one part of tille 24 of the Code of Federal Regulations.

DATES: Effective Dates: Section 35.140 is effective on November 1 5, 1 999. All other provisionsof the rule are effective on September 15, 2000.

FOR FURTHER INFORMATION CONTACT: For questions on this rule, call (202)755-1785, ext.104 (this is not a toll-free number) or e-mail your inquiry to lead regulations@hud.qov. For lead-based paint program information, contact the Office of Lead Hazard Control, Department ofHousing and Urban Development, 451 7th Street, SW, Room B-133, Washington, DC 20410-0500. For legal questions, contact the Office of General Counsel, Room 9262, Department ofHousing and Urban Development. Hearing and speech-impaired persons may access the abovetelephone number via TTY by calling the toll-free Federal lnformation Relay Service at 1-800-877-8339.

Subpart A - Disclosure of Known Lead-Based Paint Hazards upon Sale or Lease of ResidentialProperty.Subpart B - General Lead-Based Paint Requirements and Definitions for All Programs

a. Definitionsb. Exemptionsc. Optionsd. Notice of Evaluation and Hazard Reduction Activities

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191864e. Lead Hazard lnformation Pamphletf. Use of Paint Containing Leadg. Prohibited Methods of Paint Removalh. Compliance with Other, State, Tribal, and Local Lawsi. MinimumRequirementsj. Waiversk. Prior Evaluation or Hazard Reductionl. Enforcementm. Records

Subpart C - Disposition of Residential Property Owned by Federal Agency Other Than HUDSubpart D - Project-Based Assistance Provided by a Federal Agency Other than HUDSubpart E - ReservedSubpart F - HUD-Owned Single-Family PropertySubpart G - Multifamily Mortgage lnsuranceSubpart H - Project - Based Rental AssistanceSubpart l- HUD - Owned and Mortgagee-in-Possession Multifamily PropertySubpart J - RehabilitationSubpart K - Acquisition, Leasing, Support Services, or OperationSubpart L - Public Housing ProgramsSubpart M - Tenant-Based AssistanceSubpart N-Q - Reserved

Subpart R - Methods and Standards for Lead-Based Paint Hazard Evaluation and ReductionActivities

a. Standardsb. Adequacy of Dust-Lead Standardsc. Summary Notice Formatsd. lnterim Controlse. Standard Treatmentsf. Clearanceg. Occupant Protection and Worksite Preparationh. Safe Work Practicesi. Ongoing Lead-Based Paint Maintenance and Reevaluation

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191864APPENDIX 16Community Land Trust Designation lmplementation Guidelines

This Community Land Trust Program (Program) identifies Community Land Trust (CLT) eligibilityand operation criteria under which the City Council may initially designate and revoke theredesignation of a CLT, and under which the City Manager, or their designee may renew orrecommend City Council revocation of the designation of CLTs in the City of Dallas.

The designation and re-designation process are subject to the approved CHP Program and thefollowing general terms and City Manager, or their designee discretion. The elements below willbe reviewed by Staff in the Housing and Neighborhood Revitalization Departrnent ("HousingStaff") for accuracy and completeness. Housing staff will then prepare a document to be reviewedby the City Councilfor its initial designation. Housing staff will review and approve or suggest CityCouncil revoke yearly re-designation of CLTs.

Housing staff is available to discuss the CLT application process and will schedule regularinformation sessions. ln addition, select staff may be available to discuss community engagementand general CLT governance questions.

Applications are subject to verification and follow-up.

General Application Processo Attend a CLT application info session;. Request a meeting with Housing Staff to discuss community engagement, outreach and

general guidelines;. Complete an application with all required attachments;. Amend Application, submit additional details as requested or work with City Staff to meet

all Operations and Eligibility Criteriao Attend the City Council meeting when the CLTs application will be under consideration for

designation; ando Re-certify yearly.

General Application Checklisto 501(CX3) tax exemption letter;. Organization, charter, bylaws or other regulatory document adopted to govern its affairs

which includes the following provisions:o adopted articles of incorporation, or a similar governing document, stating that it

has the purpose to acquire and hold land for the benefit of developing andpreserving long-term affordable housing in the City of Dallas, as required byChapter 3738, as amended; to

o discontinuance of the organization by dissolution or othenryise that the assetsrelated to its CLT activities be transferred to the City of Dallas, the State of Texas,the United States, or a similar organization that is qualified as a charitableorganization under Section 501(c)(3), lnternal Revenue Code of 1986 anddesignated as a CLT by the City of Dallas;

r list of key employees or contractors including, name, title, years of affordable housingexperience, area of expertise, date of hire;

o most recent independently conducted audit or audit review (if organization has been inoperation for more than 1 year);

o ground lease and deed restrictions documents, approved for use by the City;

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o that include a resale formula outlining the amount of equity per year that can bebuilt while ensuring long term affordability;

o that ensures that the owners of housing units built on CLT land will either be eligiblefor a property tax discount based on the deed restriction or, where the occupant isa tenant, that the occupant will benefit from any property tax discount;

o that have terms for sale, lease and inheritance,list of board members, position, title, outreach and recruitment methodology and the CLTboard bylaws that indicate the CLT commitment to community ownership and governanceand the percent or number of seats of low-income residents or owners of CLT propertieson the board of directors and what specific expertise of board members the CLT seek outto govern the CLT;list enumerating the parcel(s) to be acquired (with date of purchase) to be included in theCLT, current appraised value, and estimation of taxes;business plan that demonstrates the ability to financially cover expenses with 3-yearprojection;list of community engagement activities that may include, number of community meetings,location, time, and number of attendees, outreach methodology, and challenges that theCLT faces with engagement and general outcome of engagement activities within the lastyear;list or explanation of any activities related to how this CLT will be used as a mechanismfor anti-displacement, recruiting and retaining people with a historic legacy in thecommunity or other community building methods;letters of support (not more than 10) from entities like: neighborhood residents,neighborhood stakeholders, non-profit and community-based organizations and for-profitbusiness; andlf requesting to operate in the same general geography as an existing CLT, a letterdiscussing the merits and the need, how and why another CLT should be designated inthe same or similar area including how the applicant is different than the existing CLT andany records of outreach to the existing CLT for partnership or collaboration.

a

a

a

a

a

a

Re-Desiqnation Appl icationTo maintain designation as a CLT in subsequent years after initial designation, a CLT must submita yearly re-designation application to the Department. The City Manager, or their designee mayre-designate the CLT or recommend to the City Councilto remove the CLT designation. The CLTmust:

o Write a letter certifying that the information in the CLT's initial application is still true andcorrect and that the CLT continues to comply with all local, state and federal regulationsOR acknowledge that information in the CLT's initial application has changed and attachupdated information;

o submit its annual audit or audit review;e submit all required evaluation and reporting metrics; ando submit additional information as required by the Department.

lncome EliqibilitvA CLT must sell or lease housing units only to eligible households as set forth in Chapter3738.006, as amended:

(a) A CLT may sell housing units only to families with a yearly income at the time of saleat or below 80 percent of the area median family income, adjusted for family size;(b) Notwithstanding Subsection (a), for housing units located on one or more tracts of landowned by the CLT that constitute a contiguous geographic area or are located in the same

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platted subdivision, the CLT may sell not more than 20 percent of the housing units tofamilies with a yearly income at the time of sale that exceeds the amount provided bySubsection (a) but does not exceed 120 percent of the area median family income,adjusted for family size;(c) At least 25 percent of the housing units sold by the CLT must be sold to families witha yearly income at the time of sale at or below 60 percent of the area median familyincome, adjusted for family size;(d) The CLT may lease housing units only to families with a yearly income at the time oflease at or below 60 percent of the area median family income, adjusted for family size;(e) Notwithstanding Subsection (d), for housing units located on one or more tracts of landowned by the CLT that constitute a contiguous geographic area or are located in the sameplatted subdivision, the CLT may lease not more than 20 percent of the housing units tofamilies with a yearly income at the time of lease that exceeds the amount provided bySubsection (d) but does not exceed 80 percent of the area median family income, adjustedfor family size;

Disqualifvi nq CriteriaThe intent of the CLT program is to ensure long term affordability and good stewardship ofcommunities through the unique nature of CLT operations throughout the City of Dallas. lf CLT isnot operating to ensure this than the CLT may not be eligible for initial designation and may loseits designation. Examples of this may include, but are not limited to, ground leases that do notreflect long term affordability protections, mortgage products that may be predatory in nature, theCity receiving community complaints about this CLT management practices, not allowing housingchoice vouchers, or not meeting the requirements of income eligibility of clients.

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t91864APPENDIX 17lnterventions by Strategy Area

IMPLEMENTATIONRequires anordinance

change

Authorizedby

ResolutionPolicy

Decision

Availablethrough

NEZNon-City

Action

Accessorv Dwellins Units XBuildins Code Fee Waivers X XCommunity Court XCode Lien Foreclosures XCommunity Land Trust XContractor Trainins Propram X XDevelopment Code Fee Waivers XEmployer-Assisted Housins Propram XEnvision Centers XExpedited Processing XHome Improvement Preservation Program X XHomestead Preservation Districts XHousingTrust Fund XIncentive ZoninelDensitv Bonuses XLien Releases X

Multi-Familv Rehab Prosram XNeishborhood Emoowerment Zones XOpportunitv Zones

Park Iand Dedication Fees

hopertv Tax Abatement X XRentaUHomeowner Maintenance Education Program xTax Increment Financins (TIF) XVoucher Sublease Propram X X

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Prooosed Tvpes of ActivitiesRedevelop-ment Areas

Stabiliza-tion Areas

EmergingMarkets Citywide Council

1

Notice of Funding Availability: NewDevelopment (for-sale and rental) or SubstantialRehabilitation

P P N Y MF:2/2012019

2

Preservation of owner-occupied housing: Homelmprovement and Preservation ProgramEnhanced 9/25/2019 with title clearino proqram

P P Y Y11/2812018

&612612019

3

Preservation of single-family rental housing:Home lmprovement and Preservation ProgramEnhanced 9/25/2019 with title clearing programand to be enhanced 12/11/2019 with NEZ

P P Y Y

4Preservation of multifamily rental housing:Home lmprovement and Preservation Prooram

P P Y Y

5 Landbankinq N P P N N/A

6 Code lien loreclosures N P P N

7

Neighborhood Empowerment Zones (unlocksdevelopment fee waivers including landscapeand tree mitigation, parkland dedication feewaivers. and orooertv tax freeze)

N Y N N

8City's second mortgage assistance program(DHAP) Y Y Y Y 1112812018

INeighborhood Revitalization Strategy AreaDesiqnation

P P P N in process

10

Dallas Tomorrow Fund (Department of CodeCompliance home repair fund through feeassessment)

Y Y Y Y

11 Code academy Y Y P Y

12 Tax increment reinvestment zone desiqnation Y Y Y N

13 Create neiqhborhood association Y Y P Y

14

Neighborhood sweep - 2-week intensive sweep:minor street repair, code inspections, signage,beautification proiects, neiqhborhood plan

Y Y P N

15 Neiohborhood beautification oroiects Y Y P Y

16Low lncome Housing Tax Credit City support -with scorinq criteria

N Y N Y 611212019

17 Voucher sublease aq reements Y Y Y Y

18 Accessory dwellinq unitsSee

CitywideY See

CitywideY-Opt-in 6127/2018

19 lncentive zoninq P P N Y 312712019

20 Homestead preservation district desiqnation N P N N

21 Community land trust Y Y Y Y 1211112019

22 Tenant based rental assistance Drooram (HlLl) Y

23 Express plan review P P N N

Key:P= Prioritv Y=Yes N=No

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